IDBI Bank looks to sell Rs 280-crore MSME loans
IDBI Bank has come out with a portfolio of micro, small and medium enterprises (MSME) loans for sale. It has put Rs 280-crore of MSME loans up for sale and received interest from seven asset reconstruction companies, including JC Flowers ARC, ARCIL, Omkara and ACRE.
Other banks like Indian Overseas Bank (IOB) and RBL Bank have sold their MSME loans in the last quarter.
MSME loans given during the Covid-19 had turned into non-performing assets (NPAs) and are now up for sale.
IDBI Bank has been focusing on reducing bad loans by selling NPAs and resolving stressed assets. The bank is looking to bring down its gross NPA ratio, which was 4.69% as of December 2023, gradually with a recovery target of Rs 3,000 crore. It wants to maintain the net NPA level at below 1%.
Spokespersons of JC Flowers ARC, ARCIL, Omkara and ACRE could not be immediately reached for comment while IDBI Bank did not respond.
According to the Financial Stability Report by the Reserve Bank of India, while the quality of the MSME portfolio of banks has improved, with GNPAs declining to 4.7% in September 2023 from 6.8% in March 2023 and 7.7% in September 2022, SMA (special mention accounts)-2 accounts increased to 1.7% in September 2023 from 0.9% in March last year.
In the previous quarter, IDBI Bank had initiated the sale of bad loans of Rs 8,842 crore. These distressed assets were spread across 12 accounts, including Videocon Oil Ventures, Jaiprakash Associates and Wind World Energy. Of these accounts, NARCL has given anchor bids for a few
