SBI to sell NPAs worth Rs.3,900 crore to asset reconstruction companies

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India’s largest lender State Bank of India (SBI) is planning to sell non-performing assets (NPAs) worth Rs.3,900 to asset reconstruction companies (ARCs) and various other financial institutions in the market. The bank has invited bids from these companies for the sale of eight major stressed accounts to recover some its bad loans.

NPAs

The bank posted the announcement in a bid document on its official website. The document noted that these accounts were put on sale as per the bank’s revised policy on the sale of financial assets. It also noted that the sale will be conducted in accordance with the regulatory guidelines.

Among the eight accounts offered for sale, the biggest account belongs to Kolkata-based Rohit Ferro Tech, which has an outstanding loan worth Rs.1,320.37 crore. Other accounts offered for sale can be listed as follows:

India Steel Corp. Ltd. – Rs.928.97 crore

Jai Balaji Industries – Rs.859.33 crore

Mahalaxmi TMT Pvt. Ltd. – Rs.409.78 crore

Impex Ferro Tech – Rs.200.67 crore

Kohinoor Steel Pvt. Ltd. – Rs.110.17 crore

Modern India Concast – Rs.71.16 crore

Ballarpur Industries – Rs.47.17 crore

The bidding process for the sale of these accounts will start from September 26th onwards. SBI has asked ARCs to conduct due diligence of these accounts as soon as they have submitted an expression of interest with the bank. Before proceeding with the due diligence, these companies must also sign a non-disclosure agreement with the bank.

SBI has sold its stressed assets multiple times in the past. Most recently, the bank offered two NPAs worth Rs.2,490 crore for sale in August. One of these assets included Bombay Rayon Fashions, which had an outstanding loan of Rs.2,260.79 crore.

Most of the public sector banks in India are affected by surging NPAs. India’s top lender SBI is one of these banks heavily affected by bad loans. For the recently ended first quarter, the bank reported a loss of Rs.4,876 crore on account of provisions for bad loans. Considering this issue, the bank is now looking for ways to bring down its NPAs through various resolution methods.

Source: Economic Times

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