Andhra Bank has put Rs 3,871 crore worth of non-performing assets (NPAs)up for sale. These NPAs involve 113 loan accounts with ticket sizes as large as Rs 507.63 crore owed by Andhra Pradesh-based Transtroy (India) Private Limited to as small as Rs 1.26 crore of N K Rubber Industries from Faridabad. Asset Reconstruction Companies are invited to file bids.
The Bank has chosen the sale route to reduce NPAs as the management finds it increasingly difficult to recover loans from such a large NPA portfolio with limited resources at the bank’s disposal.
The bank’s gross NPAs have more than doubled in the last two years and reached the level of 12.25% (Rs 17,669 crore) in March 2017 as compared to 5.31% (Rs 6,876 crore) in March 2015.
The provisioning towards bad loans rose to Rs 3,834 crore in 2016-17 from Rs 1,172 crore a couple of years ago. The provisioning requirements have shrunk the bank’s net profit to Rs 174 crore in FY17 out of a total business of over Rs 3.3 lakh crore.
“Sale of NPAs is an ongoing process. Usually ARCs are quick and effective when it comes to the recoveries, more so in the case of large consortium loans as they will be able to aggregate these NPAs better,” a senior Andhra Bank official said.
The bank has already sold NPAs worth of Rs 800 crore in the fourth quarter ended December 2016, according to the official.