0n a bid to clean up its balance sheet, south-based Federal Bank has floated a tender to dispose off Rs 80 crore worth of sticky assets. This is the first time the Aluva-headquartered bank has embarked on an exercise to sell non-performing assets (NPAs) to asset reconstruction companies (ARCs). The tender will close on March 15.
?Once we receive all the bids from the ARCs, we will decide on the pricing to finalise the deal with the highest bidder,? Federal Bank managing director & CEO M Venugopal told FE.
Explaining the modus operandi of the NPA disposal, Venugopal said the bank would follow two methods. The first method would involve a one-time sale offer where the proceeds are realised immediately. The second method envisages sharing the returns, with the ARC, from the recovery of the assets over a period of time.
Explaining the second method, he said, ?For example, if the bid for Rs 80 crore NPAs is Rs 40 crore, the bank may receive Rs 10 crore upfront. The recovery from the remaining amount will be shared between us and the ARC as and when the ARC realises some amount.?
The bank is planning to apply to RBI for more branch licences shortly. Federal Bank, which has only a representative office in Abu Dhabi also plans to go global in future.
