Indian Overseas Bank To Sell ₹13,471 Cr NPA To Bad Bank

Indian Overseas Bank To Sell ₹13,471 Cr NPA To Bad Bank

State-owned Indian Overseas Bank has announced the sale of 92 non-performing assets (NPAs) for a total estimated value of Rs 13,471 crore.

Vikrant DurgaleUpdated: Monday, May 06, 2024, 10:15 AM IST
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Indian Overseas Bank sells off 92 NPAs, accounting for 13 | Indian Overseas Bank

State-owned Indian Overseas Bank has announced the sale of 92 non-performing assets (NPAs) for a total estimated value of Rs 13,471 crore, making it one of the largest sales of bad loans. The list of non-performing accounts, which includes Videocon, Lanco, IL&FS Financial Services, Jet Airways, and Reliance Communications, has also been made public by the bank.
The IOB's list states that as of March 31, 2024, Videocon Industries, Videocon Oil Ventures, and Videocon Telecommunication together accounted for an outstanding book of Rs 1,486 crore.

Lanco Babandh Power, Lanco Resources International, and Lanco Vidarbha Thermal Power stand at Rs 1,283 crore. The bank requested Expressions of Interest (EOI) from asset reconstruction companies to transfer the non-performing accounts that were offered in two lots through an online auction on a portfolio basis.

According to bank filings on exchange, the efforts have resulted in a noteworthy decline in the bank's Gross NPA (GNPA) levels, which dropped from 11.69 percent as of March 31, 2021, to a commendable 3.90 percent by December 31, 2023.

Corrective actions

In the aftermath of PCA (prompt corrective action), IOB has recovered quite well. In September 2015, the bank was placed under PCA by the central bank as a result of a sharp rise in its bad loan portfolio. Only the quarter ending in March 2016 revealed a slippage of nearly ₹22,000 crore.

The management's turnaround plan and the government's assistance with the equity infusion allowed it to reduce its gross non-performing assets (NPAs) from approximately ₹35,000 crore in 2016 to approximately ₹8,440 crore in December 2023. During this time, net non-performing assets decreased to approximately ₹1,300 crore from approximately ₹20,000 crore.

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