IOB plans to sell 92 NPA loans for a total outstanding of ₹13,472 crore
Indian Overseas Bank plans to sell 92 NPA loans, totalling ₹13,472 crore, in two lots through e-auction under the open auction method as part of its NPA reduction exercise. The bank has published a sales notification on its website for these loans.
The first portfolio encompasses, 46 accounts financed under consortium arrangements, three accounts under multiple banking arrangements, with the remaining two accounts being sole banking ventures.
Furthermore, 38 accounts within the portfolio are formally admitted under the purview of NCLT. The second portfolio consists of 41 sole banking accounts.
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ARCs invited
The bank has invited interested ARCs (Asset Reconstruction Companies) and other eligible transferees to submit their Expressions of Interest (EOI) by May 13, in order to participate in the e-auction scheduled for May 28.
IOB said it has undertaken a multi-pronged approach to ensure maximum recovery in NPA accounts. The measures include SARFAESI actions, settlements and sales to ARCs. It has also worked with panel advocates for resolutions and insolvency proceedings.
The efforts have yielded a notable decline in the bank’s Gross NPA (GNPA) levels, falling from 11.69 per cent as of March 31, 2021, to a commendable 3.90 per cent by December 31, 2023, said a note from the bank.
Ajay Kumar Srivastava, MD & CEO of IOB, said the bank would aim to keep net NPA below one per cent. The bank’s net NPA stood at 0.62 per cent in the December 2023 quarter, down from 2.43 per cent in Q3 of FY23 and 0.75 per cent in Q2 of FY24.
Turnaround strategy
IOB has staged an impressive recovery in the post-PCA (prompt corrective action) period. The central bank put the bank under PCA in September 2015 due to massive increases in its bad loans. In the March 2016 quarter alone, it reported a slippage of about ₹22,000 crore.
A turnaround strategy of the management and government’s equity infusion support helped it cut down its gross NPA levels from about ₹35,000 crore in 2016 to about ₹8,440 crore in December 2023, while net NPAs came down to about ₹1,300 crore from about ₹20,000 crore during this period.