Indian Overseas Bank looking for buyers for subprime loans

7 Jul 2022 , 09:46 AM

According to news reports, Indian Overseas Bank (IOB) is looking for buyers for its impaired credit portfolio, which includes loans to subsidiaries of the GVK and Lanco groups as well as Aban Holdings, Rotomac Global, and Essar Group entities.

According to the reports, the bank released a preliminary list of 344 asset reconstruction companies (ARC) with non-performing accounts last week. Total loans for these accounts are Rs24,278 crore.

This is a draught list to determine whether buyers are interested. One of the individuals quoted above claimed that the Chennai-based bank had asked ARCs to submit an expression of interest along with a rough offer price. According to the people, the bank wants to straighten out its finances in order to draw in investors.

The largest account on the list, Aban Holdings, has loans that are still unpaid totalling Rs1,271 crore. Essar Oil & Gas Exploration, which has a debt of Rs77.8 crore, and Essar Power Gujarat, which has a debt of Rs148 crore, are two Essar enterprises. Other high-profile accounts include Vadraj Cement (Rs521 crore), Era Infrastructure (Rs567 crore), Frost International (Rs839 crore), Rotomac Global ($750 crore), and Era Infrastructure (Rs839 crore).

Lanco Amarkantak (Rs876 crore), Lanco Infratech (Rs509 crore), and Lanco Babandh (Rs320 crore) are three Lanco Group entities. GVK Deoli Kota Expressway and GVK Coal Developers are the GVK group accounts, with loans totalling Rs157 crore and Rs218 crore, respectively.

In October 2015, the Reserve Bank of India issued prompt corrective action (PCA) against the bank, preventing it from continuing to provide corporate loans. After provisions, NPAs were at 12% for FY16, down from the bank’s 17.4% gross NPAs.

After almost six years, the bank left the PCA in September. After provisions, net NPAs for FY22 was 2.6%, down from the reported gross NPAs of 9.8%.