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Banks are in no mood to sell stressed assets

Large part of these assets were put up for sale by IOB, Andhra Bank, SBI and PNB

Policy Pulse
Publish Date: Jul 29 2016 12:52PM | Updated Date: Jul 29 2016 12:53PM

Banks are in no mood to sell stressed assets

Stressed assets may be mounting on banks' books, but they are reluctant to sell them. They took the decision due to rising optimism that the worst may be behind and the economic growth tide could lift some of stress assets too. 


Given the rising economic activity, banks believe the price at which Asset Reconstruction Companies were willing to buy those stressed assets may not be worth selling. In the first quarter of this fiscal, banks managed to sell less than a 50th of what they put up for sale, data from the ARCs and banks show.


With the performance of many ARCs below average, banks have also built up their own teams which are better equipped to handle the recovery either through part or full sale of those loans, said bankers. 


"Banks are taking stock of the situation to find out whether they want to deal with these bad accounts on their own or sell it to ARCs or other institutional buyers," Birendra Kumar, MD, IARC, told Economic Times.


With newer players coming, banks may prefer a cash approach instead of selling assets on security receipts. Of the Rs 10,000 crore of loans up for sale, less than Rs 200 crore were sold, bankers said.


A large part of these assets were put up for sale by Indian Overseas Bank, Andhra Bank, State Bank of India and Punjab National Bank.