Bandhan Bank’s sale of stressed assets to ARC for the first time: Report


Bandhan Bank which recently received bids for offloading its written-off portfolio to an asset reconstruction company (ARC), is said to be the first such issuance by this Kolkata-based private lender. Notably, Bandhan Bank’s written-off portfolio with an outstanding of 8,897 crore is on account of small businesses and agriculture loans (SBAL) or micro-credit advances.

Earlier, this week, Bandhan Bank received bids worth 801 crore from an asset reconstruction company (ARC) for the written-off portfolio with an outstanding of 8,897 crore.

Sources told PTI on Friday said, this is for the first time that the bank will sell stressed loans to an ARC.

Bandhan Bank’s board has approved the transfer Group Loan and SBAL written-off portfolio to Asset Reconstruction Company (‘ARC’).

In its regulatory filing on Wednesday, Bandhan Bank said that it shall go for bidding as per the Swiss challenge method and the decision of sale shall be taken as per extant guidelines governing the Swiss challenge method and the relevant Policy of the Bank.

Further, the sources added that the bank will receive bids on the reserve price of 801 crore under the swiss challenge method, and the highest bidder will get hold of the portfolio.

On BSE, Bandhan Bank shares closed at 226.85 apiece down by 2.09%. The lender’s market cap is around 36,541.58 crore.

By end of the September 2022 quarter, Bandhan Bank’s gross non-performing assets improved to 7.19% as against 10.8% in Q2FY22. The bank’s net NPAs further improved to 1.86% against 3.04% in Q2 of FY22. Also, the lender has written off about 3,535 crore of micro-credit loans during the second quarter of FY23. However, the bank’s provisions doubled from 643 crore in the year earlier to 1,279.7 crore in the September 2022 quarter.

Recently, Yes Bank offloaded its stressed assets loan portfolio to the tune of a whopping 48,000 crore to J.C. Flowers Asset Reconstruction (JC Flowers ARC). Yes Bank too had conducted a transparent bidding process based on the Swiss Challenge method under the aegis of RBI’s master direction on the transfer of loan exposures. The process was conducted with the bids submitted by JC Flowers being designated as the ‘Base Bid’.

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