IDBI Bank puts home loan, LAP, corporate NPAs worth around Rs 970 cr on sale

IDBI Bank has put non-performing assets (NPAs) worth around Rs 970 crore on sale last month, according to notifications issued by the bank. The assets on the block include the lender’s exposure to KSK Mahanadi Power Company, two smaller corporate loans and 17 smaller loan accounts from the housing loan and loan against property (LAP) segments.

The gross principal outstanding in the housing and LAP loan accounts is Rs 47.78 crore and they are being offered at a reserve price of Rs 27 crore on an all-cash basis to asset reconstruction companies (ARCs) and other financial entities. Loans to two Bhubaneswar-based companies — Raipur Power & Steel and Parth Concast — are being offered at a total reserve price of Rs 77.57 crore together.

In addition, IDBI Bank is also in the process of selling its exposure to KSK Mahanadi, which is currently undergoing the corporate insolvency resolution process (CIRP). While the exact amount of the KSK Mahanadi exposure on sale could not be ascertained, IDBI Bank has admitted claims worth Rs 843 crore from the company. Late last month, the bank decided to extend the last date for submission of bids for this asset.

“Upon specific request from few of the interested buyers, it has been decided to extend the last date of submission of bids by 12 days, i.e. till December 10, 2020,” the bank said in a notification.

While banks have managed to put a lid on fresh slippages in the last two quarters, this could turn out to be a temporary phenomenon, analysts said. Emkay Global Financial Services said in a recent note that most banks and non-bank lenders have guided for better growth and asset quality outlook than earlier expected which, coupled with sector rotation and flows, led to a sharp rally in stocks.

“Though earlier indicators were positive, sustaining growth/collection momentum, particularly in retail/SME (small and medium enterprises), will be key to further re-rating,” the note said.