Bandhan Bank to Sell Non-Performing Assets and Written-off Portfolios
Indian banking giant Bandhan Bank has recently announced its intention to host a portfolio sale of non-performing assets (NPAs) and written-off portfolios. According to a filing with the stock exchange, the total value of these assets amounts to a substantial Rs69.31bn ($770m). This strategic move is set to be carried out through a competitive bidding process, designed to maximize returns and mitigate losses.
Details of the Portfolio Sale
The assets up for sale belong to the bank’s Emerging Entrepreneurs Business (EEB) and the Aspiring Business Group (ABG). The EEB division includes group loans, small business loans, and agricultural loans. The Swiss Challenge method will be used for the sale of the NPA portfolio, which has a principal outstanding of Rs32.12bn, all of which are over 180 days past due as of 30 September 2025.
Bandhan Bank will also use the auction route to sell a written-off loan portfolio valued at Rs37.19bn. The Swiss Challenge auction is a process where banks first receive an initial bid for their bad loans and then invite counter-bids from other parties. The bank compares these counter-offers to the original bid, and can award the portfolio to the highest counter-bidder, with the initial bidder having the option to match the highest offer. This approach aims to achieve the best possible price for the bank’s loan portfolios.
Financial Health of Bandhan Bank
As of September, Bandhan Bank’s gross NPAs stood at Rs70.15bn. The gross NPA ratio and net NPA ratio remained largely stable on a sequential basis at 5% and 1.4%, respectively. During the September quarter, Bandhan Bank carried out technical write-offs amounting to Rs8.65bn, of which Rs7.99bn was related to the EEB portfolio. The EEB Group constitutes 23.6% of the bank’s total loan book.
Despite the challenges with the NPAs, the bank’s gross advances grew by 7.2% to Rs1.40tn, while total deposits rose by 10.9% to Rs1.58tn. This suggests that Bandhan Bank, despite the sizeable NPA and write-off, continues to grow and maintain a healthy deposit base.
Overview
Bandhan Bank’s decision to auction off its NPAs and written-off portfolios reflects a strategy adopted by many banks worldwide to manage and mitigate losses from bad loans. This move is anticipated to improve the bank’s financial health by reducing its burden of non-performing assets. With the auction process designed to ensure the best possible price, it is a strategic move towards maintaining the bank’s overall stability and growth trajectory.
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