IVRCL was among the companies named by the Reserve Bank of India (RBI) in 2017 in its second list of bad assets to be resolved under the insolvency code.
A consortium of lenders led by IDBI Bank on Monday sought expressions of interest for acquiring its Rs 804-crore exposure in a road asset developed by IVRCL. The banks wish to sell IVRCL Chengapalli Tollways (ICTL) to asset reconstruction companies or other financial institutions in line with regulatory guidelines.
IVRCL was among the companies named by the Reserve Bank of India (RBI) in 2017 in its second list of bad assets to be resolved under the insolvency code. The company has since gone into liquidation. The road asset is being offered at a reserve price of `500 crore in an all-cash deal, implying a maximum haircut of 38%. The consortium has sanctioned loans worth Rs 862 crore to the asset. The other lenders in the consortium are Karur Vysya Bank, Union Bank of India, State Bank of India and Bank of Baroda.
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Bidders interested in buying the asset will have to send in expressions of interest (EoIs) by September 9 and the last date for submission of bids is September 27. Thereafter, there will be an inter-se bidding among the top three bidders on September 28. “Once the deal is finalised, the assignment deed and other legal formalities will be completed in the shortest possible time as mutually agreed upon,” IDBI Bank said in a notice.
Recoveries from large bad assets have been an important factor behind some banks turning a profit in the June quarter. In Q1FY22, IDBI Bank reported a 318% year-on-year jump in its net profit, aided by a recovery from the Kingfisher Airlines account. The total recovery from the account stood at Rs 733 crore.
IDBI Bank MD & CEO Rakesh Sharma said in July that the bank will be able to reduce its gross non-performing asset (NPA) ratio by 4-5% through growth in the advances or the denominator. “Now the government has also come out with the National Asset Reconstruction Company Ltd. (NARCL) and we may transfer some accounts there as well. Once the NARCL becomes functional, some assets will be transferred and that would further reduce the gross NPA by another 5-6%,” said Sharma. The gross NPA ratio stood at 22.71% at the end of June.
The lender plans to transfer a total of Rs 11,000-12,000 crore of advances to the NARCL, of which live accounts will be to the tune of Rs 7,000-8,000 crore, with the rest being written-off accounts.