IDBI CEO says bad loans worth Rs 19,500 crores can be recovered

26 Aug 2022 , 10:02 AM

In his pitch to prospective purchasers as part of India’s planned auction of the company, the chief executive officer of IDBI Bank Ltd. stated that the lender is likely to recover 195 billion rupees ($2.4 billion) of bad loans.

In a Mumbai interview, Rakesh Sharma claimed, “We are sitting on roughly 780 billion rupees of completely provisioned for bad loans, including written-off loans, and around 25% is expected to be recovered.” “This hidden asset will directly increase the bottom line and is not represented in our existing valuation.”

In what is expected to be the largest sale of the government’s share in a lender in decades, Indian government is considering selling at least 51% of the $5 billion bank, according to people familiar with the situation.

 IDBI had the highest bad-loan ratio among public sector banks 4 years ago. In order to lead the turnaround, Sharma, 64, stepped out of retirement in 2018.

Sharma, a 42-year veteran of the banking industry, has reduced funding costs, increased the emphasis on collecting soured debt, and tightened the credit underwriting procedure. 2020 marked the bank’s return to profitability following 13 consecutive quarters of losses.