Nearly four-fifths of the corporate bad loans offered for sale by public-sector banks in the June quarter had already been taken to the market earlier, underscoring the difficulty lenders are facing in finding buyers for large stressed accounts at acceptable valuations. State-owned banks offered loans with principal outstanding of ₹49,746 crore during the first quarter of the financial year, of which ₹39,671 crore, or 79.7%, represented repeat sale attempts.
A Pattern of Repeated, Unresolved Sales
Seventeen of the 36 sale processes initiated by public-sector banks involved accounts that had been offered previously but remained unresolved. When accumulated interest is included, repeat accounts represented total dues of about ₹1.03 lakh crore, or 71% of the ₹1.45 lakh crore put on the block by public-sector banks — a fairly striking figure that highlights just how stuck some of these stressed assets have become.
Indian Overseas Bank and Indian Bank Lead the Repeat List
Indian Overseas Bank and Indian Bank accounted for nearly 89% of the repeatedly offered public-sector bank loans. The entire ₹19,523 crore pool offered by Indian Overseas Bank comprised repeat accounts, while ₹15,730 crore of Indian Bank's ₹15,880 crore pool had already been taken to the market earlier.
The entire ₹1,934 crore pool offered by Central Bank of India and the ₹762 crore pool put up by Union Bank of India were also repeat processes. At Bank of India, previously offered accounts accounted for ₹174 crore of the ₹179 crore placed on the block.
Why Banks Keep Trying, Even When Sales Don't Go Through
These repeated attempts highlight the genuine challenge banks face in disposing of stressed assets. Hari Hara Mishra, chief executive of the Association of ARCs in India, said banks have several reasons for putting non-performing assets up for sale to asset reconstruction companies. An outright sale, he explained, provides banks with a clean and immediate exit from a stressed account, rather than continuing to carry it on their books indefinitely.
For written-off accounts, such sales can also add to banks' bottom lines, potentially helping them meet additional provisioning requirements associated with migration to expected credit loss norms. This is exactly the kind of situation where thorough auditing services in India matter for financial institutions, accurately assessing provisioning needs and balance sheet health under evolving accounting standards requires careful, ongoing financial review rather than a one-time exercise. Mishra also noted that a healthier balance sheet could help listed financial institutions command a higher market premium, giving banks additional incentive to keep pushing these stressed accounts back into the market.
Private Banks Tell a Very Different Story
Private-sector banks presented a markedly different picture during the quarter. They offered corporate and retail loans with principal outstanding of ₹10,734 crore, of which only ₹369 crore, or 3.4%, involved repeat processes. NBFCs and housing finance companies offered another ₹2,992 crore, with ₹180 crore, or 6%, comprising repeat attempts.
Across public-sector banks, private banks, and non-bank lenders combined, loans with total principal outstanding of ₹63,472 crore were offered during the quarter. Repeat processes accounted for ₹40,221 crore, or 63.4%, of this total, with public-sector banks contributing almost the entire repeated pool.
A Mixed Bag of Retail and Housing Loans on the Block
Private lenders offered a mix of housing, property-backed, credit-card, personal, vehicle, and other loans during the quarter. ICICI Bank offered ₹752 crore of housing loans and loans against property, while RBL Bank placed ₹712 crore of credit-card and personal-loan accounts on the block. YES Bank offered ₹643 crore of car and personal loans.
Utkarsh Small Finance Bank's ₹727 crore pool largely comprised microfinance and commercial-vehicle loans, while Bandhan Bank offered housing loans with principal outstanding of ₹304 crore.
A Clear Divide Between Public and Private Lenders
Taken together, these figures reveal a sharp divide between public and private lenders in the June quarter. While repeat attempts represented only a small fraction of loans offered by private banks and non-bank lenders, nearly 80% of the principal outstanding offered by public-sector banks consisted of accounts that had already been brought to market before, without finding a buyer.
FAQs
Q1. What percentage of public-sector bank loans offered were repeat sale attempts?
Nearly 79.7% of the ₹49,746 crore in corporate bad loans offered by public-sector banks in the June quarter were repeat sale attempts that had already been taken to market earlier.
Q2. Which banks had the highest share of repeat accounts?
Indian Overseas Bank and Indian Bank accounted for nearly 89% of the repeatedly offered public-sector bank loans, with Indian Overseas Bank's entire ₹19,523 crore pool comprising repeat accounts.
Q3. How did private banks compare to public-sector banks in repeat sale attempts?
Private-sector banks saw only 3.4% of their offered loans as repeat processes, a stark contrast to the nearly 80% figure seen among public-sector banks.