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Indian Overseas Bank Plans E-Auction for Sale of ₹13,472 Crore NPA Loans


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Indian Overseas Bank intends to sell 92 Non-Performing Asset (NPA) loans, amounting to a total of ₹13,472 crore, in two separate lots through e-auction, utilizing the open auction method as part of its NPA reduction efforts. The bank has posted a sales notification for these loans on its website.

The first batch comprises 46 accounts financed under consortium arrangements, three accounts under multiple banking arrangements, and the remaining two accounts are solely under banking ventures. Moreover, within this portfolio, 38 accounts fall within the formal purview of the National Company Law Tribunal (NCLT). The second batch comprises 41 sole banking accounts.

Interested Asset Reconstruction Companies (ARCs) and other eligible transferees have been invited by the bank to submit their Expressions of Interest (EOI) by May 13 to partake in the e-auction scheduled for May 28.

IOB has adopted a multifaceted approach to ensure optimal recovery in NPA accounts, including SARFAESI actions, settlements, sales to ARCs, collaboration with panel advocates for resolutions, and involvement in insolvency proceedings.

This concerted effort has led to a significant decrease in the bank’s Gross NPA (GNPA) levels, dropping from 11.69% as of March 31, 2021, to a commendable 3.90% by December 31, 2023, as stated in a bank’s note.

Ajay Kumar Srivastava, the MD & CEO of IOB, stated that the bank aims to maintain net NPA below one percent. In the December 2023 quarter, the bank’s net NPA stood at 0.62%, a decrease from 2.43% in Q3 of FY23 and 0.75% in Q2 of FY24.

IOB has demonstrated significant recovery post the prompt corrective action (PCA) period. The central bank imposed PCA on the bank in September 2015 due to a substantial increase in its bad loans. In the March 2016 quarter alone, it reported a slippage of about ₹22,000 crore.

A management-led turnaround strategy, coupled with government equity infusion support, aided in reducing gross NPA levels from approximately ₹35,000 crore in 2016 to about ₹8,440 crore by December 2023, while net NPAs decreased to about ₹1,300 crore from around ₹20,000 crore during this period.

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