Bandhan Bank invites bids from ARCs to sell its Rs 500-crore distressed retail mortgage portfolio, aiming to reduce bad loans. The portfolio comprises around 5,800 home loan accounts with an aggregate principal loan book of Rs 500 crore. The bank prefers upfront cash offers and targets to conclude the sale by August. Bandhan Bank's shares declined 13 percent in a month, closing at Rs 211.7 on BSE. It holds a mortgage loan book of Rs 26,950 crore with a gross non-performing asset of Rs 1,090 crore. The bank previously acquired Gruh Finance and regularly sold distressed loan books to ARCs to strengthen its financial position.
Bandhan Bank, the trailblazing financial institution, embarks on an innovative endeavour to tackle the challenge of bad loans, artfully extending an invitation to asset reconstruction companies (ARCs). A visionary move indeed, as it seeks alluring offers for its distressed retail mortgage portfolio valued at an impressive Rs 500 crore. The bank sets its sights on revitalizing its financial position, intending to bid adieu to a portfolio that encompasses approximately 5,800 accounts, with a substantial aggregate principal loan book of Rs 500 crore. Keeping the suspense alive, Bandhan Bank chooses to refrain from specifying a reserve price, expressing a preference for compelling upfront cash offers, and envisioning a seamless conclusion of the sale transaction by the month of August.
Bandhan Bank maintains an air of quietude, as it discreetly navigates this momentous decision, declining to comment on the matter despite inquisitive inquiries. Bandhan Bank's shares have witnessed a measured decline of 13 percent in the past month, with closing figures for its shares at Rs 211.7 on the Bombay Stock Exchange, marking a 1.3 percent reduction from the preceding day. Presently, the Kolkata-based private bank brandishes a remarkable mortgage loan book amounting to an impressive Rs 26,950 crore, a testament to its financial prowess. This distinguished portfolio spans diverse categories, encompassing retail home loans, loans against property, construction loans, and the acquisition of performance retail loan books.
Yet, this laudable achievement is tempered by a gross non-performing asset of Rs 1,090 crore, effectively underlining the bank's unwavering commitment to diligently manage its financial resources. Of particular note, Bandhan Bank maintains a significant retail home loan book valued at around Rs 21,000 crore at the close of the first quarter. A noteworthy milestone etched in the bank's journey was the acquisition of Gruh Finance, a formidable housing finance company, from HDFC in October 2019. This strategic manoeuvre expanded the bank's already impressive repertoire, adding a remarkable retail loan book worth Rs 17,600 crore.
While navigating the unparalleled challenges posed by the Covid-19 pandemic, the central bank demonstrated astute flexibility, granting banks the latitude to withhold classifying an account as a non-performing loan if the estimated monthly instalment remained unpaid between March and August 2020. Additionally, regulators have greenlit a one-time restructuring of loans to ease the burden on retail borrowers. The surge in defaults in retail home loans experienced by Bandhan Bank bears the imprint of the Covid-19 impact, a consequence of its acquisition of the Gruh portfolio shortly before the sweeping nationwide lockdown. However, this visionary financial institution has displayed remarkable resilience by consistently divesting its distressed loan books to ARCs, fortifying its balance sheet, and charting a trajectory of sustainable growth.
On August 23, 2015, Bandhan Bank was established with a wide array of products catering to various customer segments. Its journey began as an NGO, transformed into an NBFC, and eventually evolved into a universal bank. Throughout this transformation, the bank's central goal has remained focused on serving the unbanked and underprivileged, ensuring access to banking services for everyone, regardless of their background or financial status. Guided by the philosophy of 'Aapka Bhala. Sabki Bhalai.' (Your benefit. Everyone's welfare.), Bandhan Bank aims to foster inclusive banking, going beyond mere financial inclusion.
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