Bank of India (BoI) on Tuesday put on sale non-performing assets (NPAs) worth Rs 10,710 crore, including its exposures to eight power projects and five accounts named on either of the Reserve Bank of India’s (RBI) two lists. Some of the large exposures on sale are GMR Chhattisgarh Energy (Rs 562 crore), Lanco Babandh Power (Rs 529.45 crore), GTL (Rs 478 crore), Millennium City Expressways (Rs 359 crore) and Lavasa Corporation (Rs 328 crore).
The other power sector accounts on the block are GVK Power Goindwal Sahib (Rs 156 crore), Jyoti Power Corporation (`198 crore), Kohinoor Power (Rs 70 crore), Korba West Power (Rs 240 crore), Meenakshi Energy (Rs 68 crore), Vandana Vidhyut (Rs 224 crore) and Visa Power (Rs 146 crore). BoI is also seeking buyers for its Rs 141-crore exposure to Amtek Auto, named in RBI’s first list and acquired by Liberty House under the insolvency resolution process. Orchid Chemicals and Pharmaceuticals, Jai Balaji Industries, Visa Steel and Wind World (India) from the second list are up for sale, too. This is BoI’s second attempt in as many months to sell its exposures to these last four companies.
“The above NPAs are being offered for sale on a 100% cash basis only and on the ‘as is where is and as is what is’ basis and without a recourse basis,” BoI said in a sale document.
Last month, BoI had put on sale its exposures to Essar Steel, Bhushan Power and Steel and Alok Industries, along with 38 other NPAs worth a total `8,831 crore. All three accounts, part of the RBI’s first list of large NPAs, remain unresolved over a year since the list was issued amid several rounds of litigation.
Bankers say that lenders are selling their exposures to companies undergoing insolvency over extended periods in order to avoid adding to their provisioning burden. “Bilateral NPA sales are happening because at some banks, the full impact of provisions against these accounts has not been taken. Maybe they are approaching a point where it is better to sell off the account than to set aside more money against it,” said a senior executive with a mid-sized public-sector bank.
BoI is under the RBI’s prompt corrective action framework, which places stringent curbs on a bank’s ability to grow and consume capital.