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Sunday, April 5, 2015

Dena Bank plans lower price to sell around Rs 500 cr NPAs

State-run lender Dena Bank, which did not receive good response for its non-performing assets (NPA) sale last fiscal, is now planning to auction again but at a lower price.

The bank, which is still fighting high bad loans, had put on auction Rs 400-500 crore of stressed assets in the last quarter for asset reconstruction companies (ARCs).

"We had put on auction our NPAs but were able to sell very minimal amount of bad loans as the prices offered to us were much lower than our reserve price," a senior bank official told PTI.

Out of the Rs 400-500 crore of NPAs, the bank could sell around Rs 30 crore of loans in the auction, he said, adding the bank is looking at remaining assets put on block for sale.

The official said the bank will now again try to sell those bad loans by revising the price.

"We would again put on auction the balance NPAs and will also lower the reserve price," he said.

It could be noted that last August the Reserve Bank had made norms tighter for asset reconstruction companies by asking them to pay upfront 15 per cent of the bid value of non-performing loans, against 5 per cent earlier.

Following this, ARCs were going slow in distressed asset purchases.

Analysts say the RBI regulation has resulted in sharp fall in sale of bad loans by banks to ARCs as they are demanding lower price.

As of December 2014, the mid-sized lender's gross non-performing assets stood at 5.61 per cent, while net NPA was at 3.97 per cent.

Source : Economic Times


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