SBI to sell eight Non-Performing Assets worth Rs 3,900 crore

MUMBAI: The State Bank of India (SBI) has put eight Non-Performing Assets (NPA), worth over Rs 3,900 crore, on the block for Asset Reconstruction Companies and financial institutions to acquire.

The move comes even as banks, the government and the Reserve Bank of India are hoping to clean up a majority of the NPA backlog using the Insolvency and Bankruptcy Code, besides Project Sakshat proposed by the Sunil Mehta Committee. Notwithstanding the ongoing measures, loan recoveries have been far from desired levels, with proceedings getting stuck under the National Company Law Tribunal’s legal quagmire.

The increasing pile of bad loans stacking up for sale to third parties like Asset Reconstruction Companies (ARCs) comes close on the heels of the Supreme Court’s order directing all legal petitions against RBI’s February 12 circular to itself. The case will come up for hearing in November, but it has further slowed down the resolution process. “We are still studying the impact of the SC order. It’s difficult to say if profits will be impacted as the judgement is yet to be out,” said Prashant Kumar, DMD & CFO, SBI.

Kumar said SBI won’t be affected by the creation of another large bank following the merger of Bank of Baroda, Vijaya Bank and Dena Bank. “Consolidation is the way forward. We won’t have any impact. If anything, it’ll create strong and healthy players in the market,” he said.    

Meanwhile, of the eight loans put up for sale, the highest outstanding amounts belong to Kolkata-based Rohit Ferro Tech (Rs 1,320.37 crore), followed by Indian Steel Corporation Ltd at Rs 928.97 crore; Jai Balaji Industries at Rs 859.33 crore and Mahalaxmi TMT Pvt Ltd at Rs 409.78 crore. Other accounts include Impex Ferro Tech (Rs 200.67 crore), Kohinoor Steel Pvt Ltd (Rs 110.17 crore), Modern India Concast (Rs 71.16 crore) and Ballarpur Industries (Rs 47.17 crore).

“In terms of the bank’s revised policy on sale of financial assets in line with the regulatory guidelines, we place these accounts for sale to ARCs/banks/NBFCs/FIs, on the terms and conditions indicated,” SBI said.
The lender has asked potential suitors to conduct due diligence, after submitting expressions of interest and executing a non-disclosure agreement with it. The e-bidding will take place on September 26.