Bandhan Bank looks to sell Rs 500-crore stressed home loans to ARCs, ET RealEstate

July 21, 2023

MUMBAI: Bandhan Bank invited offers from asset reconstruction companies (ARC) for its Rs 500-crore distressed retail mortgage portfolio to lower the share of bad loans, said people aware of the development.

The bank has proposed to sell a portfolio of home loans comprising about 5,800 accounts. The aggregate principal loan book in these accounts is about Rs 500 crore, one of the persons cited above said.

The private lender has not set a reserve price but indicated that it would prefer an upfront cash offer, the same person said. The bank also informed ARCs that it would prefer to close the sale transaction by August. Bandhan Bank did not respond to ET’s request for comment.

Shares of Bandhan Bank declined 13% in the past month. Its shares closed at Rs 211.7 at the Bombay Stock Exchange, down 1.3% over the previous day.

The Kolkata-based private bank has a mortgage loan book of Rs 26,950 crore as on June 30, this year, according to the disclosure made by the bank on its website. This comprised retail home loans, loans against property, construction loans and purchase of performing retail loan books. The gross non-performing asset of the mortgage loan book is Rs 1,090 crore as on June 30.

The bank had around Rs 21,000 crore in its retail home loan book at the end of first quarter. In October 2019, the bank acquired Gruh Finance, a housing finance company, from HDFC, which had a retail loan book of Rs 17,600 crore.

After the lockdown due to Covid-19, the central bank permitted banks to not classify an account as a non-performing loan if the equated monthly instalment was not paid between March and August 2020. The regulator also allowed one-time restructuring of loans of retail borrowers.

In the case of Bandhan Bank, a spike in defaults in retail home loans is partly due to the impact of Covid since it acquired the Gruh portfolio a few months before the nationwide lockdown. Bandhan Bank has regularly sold its distressed loan book to ARCs to clean its books.

  • Published On Jul 21, 2023 at 09:07 AM IST

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