Banking News

Saraswat to offload bad loans, draws interest from top ARCs


Mumbai: Cooperative banks may be joining the banking mainstream, at least when it comes to the sale of bad loans.

Saraswat Cooperative Bank has come out with the sale of non-performing assets worth as much as ₹410 crore and, and has sought bids on a 100% upfront cash basis. The bank has appointed BoB Capital Markets as process advisor.

Over 20 asset reconstruction companies and non-banking finance companies have expressed their interest in acquiring Saraswat Bank’s non-performing assets. These include Acre ARC, Asset Reconstruction Company (India) and Edelweiss ARC.

“These NPAs are a mix of retail and corporate loans, of which some of the corporate loans are fresh NPAs and therefore there is interest in buying the portfolio,” said a source.

Spokespersons of Saraswat Bank and BoB Capital Markets did not respond to requests for comment. Acre, ARCIL and Edelweiss ARC did not immediately respond to requests for comment.

Interested bidders have access to the data room and will have until December 30 to submit bids. The bank will declare the anchor bidder on January 2 and conduct a Swiss Challenge auction on January 22, as per the bid document.The loans put up for auction are secured assets and the bank was expecting good interest for NPAs backed by security as it enhances the chances of better recovery, said a source close to the development.Saraswat Bank, one of the largest cooperative banks, is selling the NPA portfolio as a small cleanup for future growth capital.

Breaking a decade-long hiatus, the bank with NPA of 3.78% of advances, decided to sell bad loans said a source close to the development. As of March 31, the bank reported a profit of ₹887 crore. Over the past few years, the bank has focused on reducing NPAs. It has lowered the NPA ratio from 3.86% in March 2022 to 3.78% by March 31.

The bank has made concerted efforts such as monitoring advances and robust recovery actions in case of slippages, according to its annual report.

Last year, Saraswat Bank reported a higher accretion of profits and also raised capital through the issuance of ₹400 crore long-term subordinated bonds. This helped raise the capital to risk-weighted assets ratio (CRAR) from 13.94% as of March 31, 2022, to 16.01% by March 31, 2023.


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