IDBI Bank to sell several large loans to lenders, financial institutions in a bid to clean up its books faster

Struggling IDBI Bank has reportedly put for sale several large loans, including Reliance Communications (RCom) and Reliance Telecom with gross principal outstanding of Rs 1,056 crore, a media report said.

According to The Times of India, the bank is also selling loans of Loop Mobile Mittal Corp, Amzen Transportation Industries, Nandhi Dal Mills and Sunrise Pictures.

IDBI Bank is planning to sell bad loans to banks, financial institutions or asset restructuring companies in order to step up efforts to recover dues from loan offenders, CNBC-TV18 said.

“We have set up a war room to focus on recovering the non-performing loans while another team is keeping a check on loans showing early signs of stress,” Rakesh Sharma, chief executive officer of IDBI Bank was quoted as saying by Bloomberg on Monday. Sharma told Bloomberg that the lender wants to sell stressed loans “by June-end to quicken the pace of clean-up exercise.”

IDBI Bank to sell several large loans to lenders, financial institutions in a bid to clean up its books faster

Representational image. Reuters

IDBI Bank is also charting out a revival strategy to bring banking and insurance under one roof to its customers, along with its new owner Life Insurance Corporation (LIC).

In January, LIC had completed the process of picking up a controlling 51 percent stake in the nearly crippled IDBI Bank which has been under the prompt corrective action framework of the regulator that bans it from corporate lending and branch expansions, salary hikes and other regular activities.

The RBI action followed after its bad loans touched 33 percent which in December 2018 has come down to 29 percent of its total assets. The bank and LIC, through its collective network of branches, offices and workforce, have started leveraging their mutual business synergies, a statement said on Sunday. The major areas of synergy identified for the immediate short-term are pertaining to selling of LIC policies through IDBI branches.

In a separate development, insurance regulator IRDAI on Monday said it sought a proposal from Life Insurance Corporation of India (LIC) for paring its shareholding in the recently acquired controlling stake in IDBI Bank.

Insurance Regulatory and Development Authority of India (IRDAI) stipulates that insurers are allowed to hold only up to 15 percent stake in any listed entity. But LIC, with a special dispensation from IRDAI, holds more than the limit in some state-run banks. Besides, the Reserve Bank permits a ceiling of 15 per cent for promoter stake in a private sector bank.

With inputs from agencies

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Updated Date: Mar 13, 2019 18:41:49 IST

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