Andhra Bank and Allahabad Bank willing to sell bad loans worth Rs 6,000 crore

Andhra Bank and Allahabad Bank, two of the state-run banks in India, have put up nearly Rs 6,000 crore of bad loans for sale, given the rising pressure on lenders to clean their books of bad debts.

Andhra Bank has decided to sell off more than 100 accounts with loans that add up to about Rs 4,000 crore of loans, Allahabad Bank on the other hand, wishes to sell off 73 accounts with outstanding loans that account for Rs 2,000 crore.

The assets on sale also include Seven Hills Hospital, Visa Power, Visa Steel, L&T Chennai Tada Toll Road, KS Oil, Transstroy India and its associate companies Maheshwari Ispat and Abhijeet Power, two senior executives told ET. Around two dozen asset reconstructions companies (ARC) will participate in the bid.

This is the first time that commercial banks have decided to auction their bad loans, after the Reserve Bank of India revised norms for sale of bad loans in the starting of this financial year.

The new rules state that ARCs will have to pay at least half of the purchase price in cash while the balance can be paid in form of security receipts.

Talking of the banks and their performance in FY 2016-17, while Andhra Bank reported a net profit of Rs 174 crore with gross bad loans of 12.2% of total loans (Rs 17,669 crore), Allahabad Bank reported a net loss of Rs 314 crore with gross bad loans of 13% (Rs 20,687 crore).

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