Bandhan to sell bad assets
Bandhan Bank on Wednesday said it has received a Rs 801-crore binding bid from an asset reconstruction company for a portfolio of written-off assets with an outstanding of Rs 8,897 crore.
The bank’s board had earlier decided to transfer group loans and small business and agro loan (SBAL) written-off accounts to asset restructuring companies in a bid to clean the balance sheet.
“The bank shall go for bidding under the Swiss challenge method and a decision of sale shall be taken according to extant guidelines governing the method and the relevant policy of the bank,” Bandhan Bank told stock exchanges.
The Swiss challenge method, where private firms and individuals could submit a proposal to an authority without any invitation, was recently used when Yes Bank offloaded NPAs worth Rs 48,000 crore to JC Flowers ARC.
In a recent disclosure to market analysts, the city-based bank had said that it had group loans worth Rs 38,200 crore on its books as of September 30 with a total of 11.1 million borrowers. However, the gross non-performing assets in the category were at 12 per cent which has inched up 10 per cent on March 31.
The SBAL assets under management were Rs 15,700 crore (157 billion) as of September 30 with 1.9 million borrowers.
The gross NPA in this category has also increased from 3 per cent in March to 4 per cent in September.
According to market analysts, the management is currently working on product diversification with more focus on growing the housing finance, commercial banking and retail assets while the share of microfinance loans(emerging entrepreneur business) is expected to come down.
“The mix of the group business will moderate to 62 per cent/53 per cent by FY23/ FY25, while the mix of SBALloans is likely to increase to 38 per cent/47 per cent. At present, 100 per cent of the SBAL loans are to its erstwhile group MFI customers.
“The regulator defines MFI customers as those with a household income of Rs 0.3million and thus NTB (new to bank) customers, higher than this income limit can be tapped under the SBAL segment, which will drive overall growth,” Motilal Oswal said in a report on Bandhan Bank.