Lenders are looking at selling around Rs 4,500 crore worth of bad assets to asset reconstruction companies before March 31, sources close to the development said.
While this is part of an annual exercise by bankers to clean up their balance sheets during the last quarter of the financial year, the market has seen a higher number of loans up for sale this year. In the previous financial year, banks had put up only about R3,500 crore worth of bad loans on sale during the January-March quarter, a senior official with an asset reconstruction company said.
IDBI Bank has put up around R880-crore worth of bad loans, while Punjab National Bank and Allahabad Bank have announced sale of about R600 crore of non-performing assets (NPAs) each.
Similarly, Central Bank of India has put up R525 crore worth of bad assets on sale and UCO Bank has decided to sell R382 crore worth of bad loans. Private sector lender Federal Bank, too, is looking at selling R230 crore worth of bad loans to asset reconstruction companies.
"Currently various ARCs are in the process of completing their due diligence for these accounts that we have put up on sale and they will then be submitting their offers soon. By Februrary 28 we hope to close these sales,” said Shubhalakshmi Phanse, CMD, Allahabad Bank.
However, not a lot of banks have been successful in selling these bad loans so far, owing to higher pricing. “Nearly three years ago, banks used to give discounts of 50% and above, however the discounts today are not very attractive and thus both parties have not been able to arrive at a proper price,” another senior official at an asset reconstruction firm said.