Bank of India, the state-owned public sector bank based in Mumbai, has invited bids from asset reconstruction companies for the sale of Rs.8,800 crore worth of bad loans from nearly 45 stressed accounts. Some of the top accounts listed for sale include Bhushan Power, Essar Steel, GMR Chhattisgarh, Binani Cement, etc. The bank is currently undertaking this process to reduce bad loans and increase its profit in the upcoming quarter.
Among the largest defaulters on the list, Bhushan Power has an outstanding loan of Rs.2,439 crore from the domestic and overseas branches of the bank. The second largest defaulter on the account is Essar Steel, which has an outstanding loan of Rs.1,557 crore.
Bank of India is expected to finalise a reserve price for the deal based on the bids received from various asset reconstruction companies. The bidding process is expected to start on September 26, and the sale will be conducted on a 100% cash-only basis. The lender is hoping to conclude the sale within this month so that the earnings can be reflected in this quarter’s profit.
Bankruptcy proceedings are still underway for some of the accounts listed here. However, the lender has decided to put these accounts on sale as the proceedings will not be completed by the end of this quarter. By selling these accounts, Bank of India hopes to show better earnings in the upcoming quarters. For some accounts, the bankruptcy resolution has already ended but payments were delayed by buyers.
To offset the losses caused by NPAs, Bank of India is also looking for other ways to raise funds. Some of the recent reports indicated that the lender is looking forward to raising Rs.1,000 crore in capital by selling some of its non-core assets.
Other public sector banks have also invited bids from asset reconstruction companies for the sale of stressed accounts. Yesterday, SBI announced the sale of bad loans worth Rs.3,900 crore by inviting bids for eight of its stressed accounts.
Source: Economic Times