Bandhan Bank to shed home loan NPAs
₹775.6 crore, where repayments were overdue by over six months, to an asset reconstruction company. “The bank received a binding bid of ₹280.39 crore, or 36.15% of outstanding pool for the said non-performing asset (NPA) portfolio, on (an) outright cash consideration basis," the bank said in a regulatory filing on Thursday, without naming the ARC. Bandhan Bank said it opted for a Swiss Challenge auction for selling the soured loans.
Under this mechanism, a prospective buyer offers a bid to the lender, which subsequently, calls for counter bids from other potential buyers. New bidders are expected to place higher bids than the original bidder, making the process more competitive. On 4 November, the bank put on sale its housing finance NPAs with outstanding dues worth ₹775.6 crore as on 30 September.
The pool of NPAs comprised 8,529 accounts. On 19 December, the bank sought counter bids from ARCs, non-banking financial companies, banks, and other financial institutions for the same portfolio as part of the Swiss Challenge mechanism. Regulatory guidelines require banks to use the Swiss Challenge method for auctioning bad loans worth ₹100 crore and above.
On 1 December, The Economic Times reported that the portfolio was part of the loans Bandhan bank acquired from Gruh Finance. The Kolkata-based bank acquired Gruh Finance in 2019. Meanwhile, on 15 December rating agency Crisil downgraded Bandhan Bank’s non-convertible debentures (NCDs) of ₹1,295 crore to AA-/stable, from AA/negative, while affirming ratings on ₹6,000 crore of certificate of deposits.
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