IDBI chairman GP Gupta said told The Financial Express, "We are finding it hard to locate buyers for collateralised securities which include property and plant and machinery acquired from defaulting borrowers."

Alarmed bankers are approching MNC property consultants to find buyers but these consultants are wary of accepting such properties since these are often not located in prime locations and lack basic infrastructure facilities.

Echoing similar sentiments, Bank of Baroda chairman K Kannan said that asset reconstruction companies, when they are set up, can play an important role in helping banks to realise a part of theirnon-performing assets (NPA) by buying it from banks.

"We are sitting on substantial assets in the form of land, plant and machinery, which we are not selling as there are no takers. We are waiting for the market to revive," he said.

The swapping of realty against bad debts seemed like a good idea when the property markets were booming. But faced with the rising level of defaults, banks found that taking over real estate assets was the only option they had. But they are now finding that these assets are as illiquid as plant and machinery. Finding a buyer who will buy both plant and machinery and the land on which they are located is next to impossible.

The latest monthly property deals for Mumbai alone show two banks, namely Andhra Bank and Canara Bank, squaring off debts in lieu of property. Last month, Vyasa Bank accumulated property of over Rs 18 crore from a Mumbai-based builder as settlement of their debts.

As per a 1997-98 data on non-performing assets (NPA) accumulated by banks and institutions,State Bank of India topped the list at Rs 11,465.36 crore, followed by IDBI, which has accumulated Rs 5.101 crore. ICICI's net outstanding NPA is pegged at Rs 3,623 crore.

The rising NPA levels have led to fiscal 1998-99 being a not very productive year for the banking industry, with all big-time nationalised banks registering a substantial drop in their net profit. SBI's net non-performing assets (NPA) for 1998-99 jumped 1.11 per cent to 7.18 per cent from 6.07 per cent in the previous year. BoB was another bank whose net profit dropped due to a Rs 361-crore provisioning for NPAs. The size of BoB's NPAs as on March 1998 was over Rs 3,129.30 crore. Sanjay Dutt, senior manager at property firm Richard Ellis, says that his firm has "been approached by banks to help them clear some of their unprofitable properties. The banks have essentially asked us for a detailed plan of action on how to assist them in selling."

The banks have not been able to make headway on their own since they have little idea aboutoperating in the realty market. Nor do they know how to market real estate to the right segments of customers.

Consultants like Brooke International charge 2 per cent of the value of the property as fees for working on such deals. Besides they also charge separately for expenses incurred on producing brochures and other exclusive marketing strategies undertaken, says Brooke vice-president Ashok Kumar.