By Siddhant Mishra
The board of Spandana Sphoorty Financial has approved the transfer of its portfolio of distressed loans, including those written off, to an asset reconstruction company (ARC) for a consideration of Rs 95 crore, the company said in a filing with the exchanges. As of September 30, the outstanding for the written-off portfolio was Rs 323.08 crore.
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“…Management committee of the board of directors of the company vide its resolution dated December 28, 2022, Wednesday, has approved the transfer of stressed loan portfolio, including written-off loans, of Rs 323.08 crore outstanding as on September 30, 2022, to an asset reconstruction company pursuant to Swiss Challenge Method for a consideration of Rs 95 crore,” the firm said in the filing.
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The Hyderabad-based microfinance institution said it will go for a sale using the Swiss Challenge Method, as mandated by regulatory norms for assets exceeding Rs 100 crore in value. Under the Swiss Challenge Method, a bidder makes an unsolicited bid to the auctioneer for the asset. Once approved, the auctioneer seeks counter proposals against the original bidder’s proposal — known as the reserve price — and chooses the best among all the options. The original bidder is granted the “right to first refusal”. If it agrees to match the offer, the bid is awarded to it, else the same is awarded to the challenging bidder.