ARCs pick 10% of assets put on sale by State Bank of India in Q1

By: | Published: July 17, 2015 12:19 AM

State Bank of India (SBI) managed to sell 10% of bad loans it had put up for sale to asset reconstruction companies ...

State Bank of India (SBI) managed to sell 10% of bad loans it had put up for sale to asset reconstruction companies (ARCs) in three months to June 2015, sources said. Of the Rs 2,500 crore of loans put on sale, Rs 250 crore was bought by ARCs.

“Out of 37 accounts put on the block, seven could be sold,” he said. According to an SBI official, the bank also plans to sell around Rs 4,500 crore of bad loans that have been put on the block on July 10. “The sales in Q1 were tepid because ARCs that had already bought assets in Q4 last fiscal were not adequately capitalised,” he said. The bank had sold Rs 4,510 crore loans to ARCs in Q4 FY15.

Earlier last month, FE reported that to attract more responses from ARCs, SBI streamlined the sale process and fixed a date for showcasing bad loans every month.

According to sources, beginning April, the bank has been putting assets on the block on 10th of every month and seeking bids within 30th. A team of 10 bankers headed by a general manager sends out primary information memorandums or details of the loans to the 15 ARCs seeking bids.

In March, SBI and its subsidiaries had sold Rs 1,500 crore of loans given to Abhijeet Group firm Corporate Power to Asset Reconstruction Company India (ARCIL) for Rs 340 crore or at a discount of 77%.

The company owes around Rs 4,500 crore to a consortium of bankers, led by State Bank of India.

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