IDBI Bank’s Gift City branch plans to sell 43 bad loans with gross principal outstanding of $375 million

The IDBI Bank’s GIFT City Branch is planning to sell 43 non-performing asset (NPA) accounts with gross principal outstanding of $375 million. Majority of these accounts are from United Arab Emirates (UAE).

This move comes even as the process for strategic disinvestment of 60.72 per cent in IDBI Bank by the government and the Life Insurance Corporation of India (LIC) (along with transfer of management control) is currently work in progress.

The disinvestment process was initiated by the Finance Ministry’s Department of Investment and Public Asset Management (DIPAM) in October 2022. Currently, the government and LIC hold 45.48 per cent and 49.24 per cent stake in the bank, respectively.

As a part of the resolution of stressed assets, the bank’s NMG (NPA Management Group) Gift City Branch (in Gujarat) is planning to undertake portfolio due diligence and offer its portfolio for sale to asset reconstruction companies (ARCs) and other eligible financial players in single/multiple market lot.

The bank said it will appoint a process advisor for advising/carrying necessary due diligence activity and maximising the value to the bank.

The advisor is expected to carry out a detailed portfolio review, including composition of other lenders of the borrower and IDBI Bank’s share, assess security available with the bank, conduct due diligence through a reputed law firm as multiple jurisdictions are involved and the borrowers/guarantors are based at different locations — UAE, Hong Kong, Ecuador, Qatar, etc.

The bank, in its request for proposal, said the process advisor has to identify a list of target investors and funds/potential partners and approach them post-discussion with it. Further, the advisor has to set up discussions with shortlisted investors/partners to generate interest for the portfolio.