SBI to sell bad loans worth Rs1,471 crore to ARCs in bid to clean up books
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Mumbai: India’s largest lender State Bank of India (SBI) has put on block bad loans with outstanding balance of Rs1,471.47 crore on sale to asset reconstruction companies and financial institutions.
The bank has sought expression of interest by Friday and the e-bidding process will take place on 9 June, according to a tender on its website.
Among the accounts on sale, the largest exposure is on Adhunik Power & Natural Resources Ltd, where banks have converted their debt into equity under the Reserve Bank of India’s (RBI) strategic debt restructuring.
SBI has outstanding exposure of Rs806.69 crore in the form of debt and Rs199.57 crore as equity to the company.
Notably, other lenders to Adhunik Power have also given their approval to sell their exposure to the company. Accordingly, apart from SBI’s stake, other lenders have also agreed to sell their debt exposure to the tune of Rs1,457.27 crore.
Despite strong fourth quarter performance by SBI, brokerages have expressed concerns over the asset quality because of the large stock of bad loans of its associate banks that the bank inherited after their merger with it.
SBI merged five of its associate banks with itself, effective 1 April.
Consolidated gross non-performing assets (NPA) ratio was at 9.11%, higher than 6.90% of the stand-alone entity. In absolute terms, gross NPA of the standalone entity was at Rs1.12 trillion at the end of March. The consolidated gross NPA was Rs1.79 trillion. SBI revised its consolidated watchlist of stressed loans to Rs32,427 crore from Rs13,310 crore on a stand-alone basis as at the end of December.