Synopsis: Indian Overseas Bank (IOB) is set to auction ₹638 crore worth of non-performing assets (NPAs), including unsecured education and MSME loans, on January 31, 2025. This move follows the bank's earlier decision to sell ₹11,500 crore in corporate bad loans to enhance asset quality.
In a strategic effort to bolster its financial health, Chennai-based Indian Overseas Bank (IOB) has announced plans to auction ₹638 crore in non-performing assets (NPAs).
This portfolio comprises unsecured education loans amounting to ₹245 crore and micro, small, and medium enterprise (MSME) loans totaling ₹393 crore.
The bank has received expressions of interest from approximately 10 asset reconstruction companies (ARCs) for these assets.
Due diligence processes are currently underway, with the e-auction scheduled for January 31, 2025.
For the unsecured education loans, IOB has set a reserve price at 50% of the outstanding amount, equating to ₹122.25 crore.
The bank requires that 25% of the bid amount be paid in cash, with the remaining 75% payable through security receipts (SRs), which can be redeemed upon recovery.
Similarly, for the MSME loans, the reserve price is set at 40% of the outstanding amount, or ₹157.27 crore, with the same cash-to-SR payment ratio.
This initiative follows IOB's earlier decision to auction ₹11,500 crore in corporate bad loans, encompassing 46 large accounts, including companies such as Videocon Industries, Amtek Auto, and Lanco Infratech.
The e-auction for these corporate accounts is slated for January 30, 2025, with a reserve price of ₹2,290 crore and bids accepted on an all-cash basis.
Conclusion:
Indian Overseas Bank's proactive measures to offload substantial non-performing assets reflect its commitment to improving asset quality and financial stability. By engaging with asset reconstruction companies and conducting structured e-auctions, IOB aims to streamline its balance sheet and focus on sustainable growth avenues.
Disclaimer: The information provided in this article is based on available sources as of January 23, 2025. Financial decisions involve risks; readers are advised to consult financial advisors before making investment choices.
