SBI to sell Rs 230-crore NPAs with up to 79% haircut

By: |
New Delhi | Updated: May 29, 2019 4:04 AM

State Bank of India (SBI) on Tuesday put on sale four non-performing assets (NPAs) worth Rs 230 crore on a 100% cash basis, with reserve prices implying haircuts of up to 79% for the accounts.

sbi, banking sector, banking industry, state bank of indiaBad loan accounts put on sale by banks in the March quarter of FY19 rose to over Rs 27,000 crore as lenders hastened to book cash recoveries ahead of the end of the financial year 2018-19, according to sale documents put up by banks.

State Bank of India (SBI) on Tuesday put on sale four non-performing assets (NPAs) worth Rs 230 crore on a 100% cash basis, with reserve prices implying haircuts of up to 79% for the accounts.

The four assets are Lovely International and Lovely Enterprises (Rs 95 crore), Abhijeet Ferrotech (Rs 89 crore), Trichy Tanjavur Expressway (Rs 24 crore) and Madurai Tuticorin Expressway (Rs 22 crore). The reserve prices for the four accounts suggest that the haircuts SBI is prepared to take stand at 79%, 63%, 48% and 43% respectively.

“Besides the amount outstandingunder any disbursed loans, bank shall notify the purchaser details of any un-devolved LCs (letters of credit)/ BGs (bank guarantees) yet to be invoked/ installments of DPGs (deferred payment guarantees), which are not yet due, in respect of the NPA accounts being offered for sale by the Bank,” SBI said in a bid document.

The bank shall retain pari-passu charge on the securities relating to uncrystallised non-funded facilities. In case of crystallisation of non-funded facilities after the sale, that portion will be converted to funded exposure and sold by SBI to the same buyer who buys the funded exposures currently on sale.

Bad loan accounts put on sale by banks in the March quarter of FY19 rose to over Rs 27,000 crore as lenders hastened to book cash recoveries ahead of the end of the financial year 2018-19, according to sale documents put up by banks. Delays in resolution through the Insolvency and Bankruptcy Code route may have also forced banks’ hand.

Among the large exposures on the block in Q4 were Bank of Baroda (BoB) and IDBI Bank’s exposures to Reliance Communications (RCom) — Rs 1,838 crore and Rs 1,056 crore respectively. The other large accounts banks are trying to palm off are those of Bhushan Power & Steel and Alok Industries. These two are yet to be fully resolved in the insolvency courts and banks’ provisioning burden against them shot up to 10% in the March quarter.

While the market for cash-based NPA sales to asset reconstruction companies (ARCs) was robust through most of FY19, bankers spoke of a slackening in Q4. For instance, Union Bank of India sold bad loans worth `700 crore in FY19, though only Rs 38 crore of this came in the fourth quarter. Rajkiran Rai G, managing director and chief executive officer, Union Bank, told reporters: “Last quarter, we didn’t see much interest. Now we will have to gauge the market again for sales.”

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Fortunes of troubled NBFCs turn; show signs of revival on stimulus amid pandemic fallout
2IndusInd Bank sells part of pledged shares of Eveready Industries, McLeod Russel
3Bank debt restructuring to delay bad loans recognition: Fitch