With the economy remaining sluggish and build up of bad loans showing no signs of letting up, State Bank of India is planning a multi-pronged strategy to help keep non-performing assets (NPA) in check, including the sale of a R1,000-crore bad-loan portfolio.
“A bad loan portfolio of R1,000 crore has been identified which may be put up for sale to an asset reconstruction company if we get a good price,” said a senior official.
The sale of R1,000 crore in bad assets is part of a bigger strategy at the bank to bring down growing pile of bad loans which hit R51,189 crore in terms of Gross NPAs and R21,956 crore in terms of net NPAs as on March 31, 2013.
The bank is also trying to push stressed corporates to consider sale of assets to recover dues. High profile cases in which the top management of the bank is pushing asset sales includes Suzlon, where lenders are pushing for a sale of non-core assets along with asking Suzlon to look at sale of certain core windmill assets which may may not be generating adequate returns, said officials.
Last year, bankers were successful in brokering a deal between Lloyds Steel and Uttam Galva, in which Uttam Galva bought out Lloyds Steel and agreed to take on the company\'s debt, thereby making it easier for banks to recover their outstanding loans.
Bankers are also pushing other corporates, particularly those in the infrastructure sector like Lanco Infratech, to consider a sale of some assets in road portfolio to help ensure repayment of dues, said banking sources. Reports suggest that Lanco, which has a net debt of R33,500 crore as on March 31, 2013, is looking to raise R1,000 crore through non-core asset sales.
In the stressed textile sector, a portfolio that has seen a high level of defaults, bankers are pushing units to consolidate or downsize in keeping with the demand realities of the market.
Convincing managements to sell down assets might be an easier way for bankers to recover money, but the prevailing conditions in the market is making it tough to find buyers, say bankers and analysts. However bankers are being careful not to push for asset sales at rock bottom prices.
“We should not sell assets where the price being offered is below the reserve price,” says Soundara Kumar, the State Bank of India DMD. In the absence of an easy way