Union Bank of India, Corporation Bank and Bank of Maharashtra on Monday said they are planning to sell bad loans worth Rs 2,700 crore to asset reconstruction companies (ARCs) this quarter.
While Corporation bank is planning to sell close to R1,000 crore of NPAs to ARCs in September, Bank of Maharashtra plans to offload bad loans worth R500 crore. Union Bank of India also plans to sell NPAs worth R1,200 crore.
Corporation Bank chairman and managing director SR Bansal said the lender is selling NPAs to ARCs for the first time in two years. On being asked at what discount the sale would happen, Bansal declined to comment, saying it was on a case-to-case basis.
“I do not remember exactly, but maybe around 11 to 17 accounts might be there,” Bansal said. “All banks are concerned about NPAs. We are focussed. We have made special four verticals for recovery and monitoring of standard assets and recovery of NPAs,” Bansal added.
The bank also reduced its base rate by 10 basis points to 9.9% effective Monday. Commenting on the affect of this rate cut on margins, Bansal said it will not have any impact.
“We have reduced our cost of deposits. We have done our calculations and it will not affect anything,” said Bansal.
The Reserve Bank of India has cut the repo rate by a total of 75 basis points in 2015. On an average, banks have passed on this rate cut by 30 basis points.
“We had passed on 25 bps earlier and today a further 10 bps has been passed on,” Bansal added.
In the quarter-ended June, Corporation bank reported a 11.75% fall in its net profit on a year-on-year basis. Its gross non-performing assets had increased from 3.96% to 5.43% on a year-on-year basis and the net NPAs had risen to 3.55% from 2.71% a year ago. (With agency inputs).