Bandhan Bank on Wednesday said it has received a Rs 801-crore binding bid from an ARC on the security receipt consideration basis for group loan and small business and agri loan (SBAL) written-off portfolio with outstanding of Rs 8,897 crore.
“We would like to inform that pursuant to the approval of the board of directors of the bank to transfer group loan and SBAL written-off portfolio to asset reconstruction company (ARC), the bank has received binding bid from an ARC, amounting to Rs 801.00 crore, on the security receipt consideration basis, for the written-off portfolio with outstanding of Rs 8,897.00 crore,” the bank said in a stock exchange filing.
“The bank shall go for bidding as per the Swiss challenge method and decision of sale shall be taken as per extant guidelines governing Swiss challenge method and the relevant policy of the bank,” the lender said.
Notably, Bandhan bank wrote off microfinance loans (mostly group loan) worth around Rs 3,500 crore during the second quarter this fiscal. Its net profit for the second quarter of FY23 fell 76% on a quarter-on-quarter basis due to higher provisions as it wrote off microfinance loans. The bank reported a net profit of Rs 209.3 crore during Q2FY3, compared with a net profit of Rs 886.5 crore in the previous quarter.
Interestingly, Yes Bank concluded assignment of its Rs 48,000-crore stressed asset loan portfolio to JC Flowers Asset Reconstruction company earlier this month. The bank had earlier declared JC Flowers ARC as the winner of the Swiss Challenge process for sale of its identified portfolio of stressed assets.
At the end of the second quarter this fiscal, Bandhan Bank’s gross non-performing assets (NPAs), in absolute terms, stood at Rs 6,853.85 crore, witnessing a fall of 21.79% year-on-year. Sequentially, NPAs declined by a marginal 1.83% quarter-on-quarter, from Rs 6,967.54 crore for Q1FY23. The gross NPA ratio came down to 7.19% during Q2FY23 from 10.8% during Q2FY22.
In the second quarter of FY23, 66% of the lender’s NPA customers and 62% of its restructured customers paid their dues, either in part or in full. Total cash recovery and upgradation stood at Rs 529 crore.
“We are engaged with our customers on a regular basis to encourage them to ensure timely payment. We are confident that it is only a matter of time before these customers regularise their accounts fully, after which we expect to see a significant drop in gross NPAs in the next couple of quarters,” Bandhan Bank MD and CEO Chandra Shekhar Ghosh said during the second quarter earnings call in October.
On Wednesday, the bank scrip on the BSE closed 0.14% lower at Rs 243.05.