Bandhan Bank to Sell Distressed Retail Mortgage Portfolio Worth Rs 500 Crore to lower bad loans

21 Jul 2023 , 01:33 PM

Bandhan Bank, a Kolkata-based private lender, seeks to reduce bad loans and has invited offers from asset reconstruction companies (ARC) for its distressed retail mortgage portfolio worth Rs 500 crore.

The proposed portfolio comprises approximately 5,800 accounts consisting of home loans, with a total principal loan book of about Rs 500 crore. While no reserve price has been set, Bandhan Bank prefers upfront cash offers for the distressed portfolio. The bank aims to finalize the sale transaction with ARCs by August.

Based on data, As of June 30, the bank’s mortgage loan book stands at Rs 26,950 crore, including retail home loans, loans against property, construction loans, and purchase of performing retail loan books. The gross non-performing asset (NPA) of the mortgage loan book is reported to be Rs 1,090 crore as of June 30.

Bandhan Bank has regularly sold its distressed loan portfolios to ARCs as part of its strategy to maintain a healthy financial position and clean its books.

The Reserve Bank of India’s relaxation on classifying accounts as non-performing loans during the Covid-19 lockdown and allowing one-time loan restructuring for retail borrowers has provided some relief to banks in handling loan delinquencies.

By offloading the distressed retail mortgage portfolio, Bandhan Bank aims to proactively manage its asset quality and strengthen its financial position amid challenging economic conditions.

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