Axis Bank on Friday sought buyers for its Rs 121-crore exposure to Kolkata-based Hindustan National Glass & Industries. The loan will be sold through a competitive bidding process under the Swiss challenge method, the lender said in a public notice.
Over the last few months, banks have taken to reducing bad loans on their books by offering loans to asset reconstruction companies (ARCs) as out-of-court resolutions have slowed to a trickle.
As per Hindustan National Glass’s annual report for 2018-19, State Bank of India (SBI) has filed an insolvency petition against the company before the National Company Law Tribunal’s (NCLT) Kolkata bench. Thereafter, the company itself has filed a suit against the consortium of lenders with SBI as the lead bank in the Calcutta high court, seeking extension of time for repayment of outstanding loans. The matter is pending before the HC.
The other lenders whose exposures the company has defaulted on are HDFC Bank, Syndicate Bank, L&T Finance, Edelweiss ARC, DBS Bank, RABO Bank, EXIM Bank, Standard Chartered Bank, Bank of Baroda and Life Insurance Corporation (LIC) of India.
FE had reported early last month that banks had put up bad loans worth `8,543 crore for sale in the three months to December. Apart from corporate non-performing assets (NPAs) such as Garden Silk Mills and BILT Graphic Paper, loans to a large number of medium-sized enterprises have also been put on sale by banks in Q3FY20. Resolving such accounts is a challenge for banks in the absence of a well-defined framework.
The banking system has been waiting for the central bank to come up with a stress-resolution framework for assets under Rs 1,500 crore. Earlier, expected to be issued in the current quarter, the framework is now expected to be made public only in FY21.