State-run banks to sell off bad loans worth Rs 2,000 crore

RBI has encouraged banks to look at asset reconstruction companies as a supportive system to deal with the rising NPA menace

GN Bureau | May 2, 2014



With a view to relieve themselves from the mounting pressure of the bad loan pile, a number of public sector banks (PSBs) is hoping to sell about Rs 2,000 crore of these loans to asset reconstruction companies.

According to media reports, the various banks working on offloading bad loans include – UCO Bank (Rs 1,000 crore), State Bank of Hyderabad (Rs 700 crore), and  Canara Bank and State Bank of India which are selling off smaller portions to asset reconstruction companies (ARCs).

The move, which comes in the beginning of this fiscal, is a first in almost 10 years and reflects the urgency at PSBs to get rid of bad loans. Earlier, banks sold off loans to ARCs only towards the end of the fiscal in order to present clean balance sheets.

According to analysts quoted in media reports, banks are undertaking this step to benefit from the one-time dispensation facility given by the Reserve Bank of India (RBI) on sale of such loans. Under this facility, if banks sell assets to ARCs below the net book value, losses incurred due to this can be amortised over two years up till March 2015.

In addition, RBI has encouraged banks to look at ARCs as a supportive system to deal with stressed assets instead of dumping NPAs there as a last resort.
 

 

Comments

 

Other News

BJP does well in Gujarat, show exit polls

BJP is all set to retain Gujarat, indicated one exit poll. Another exit poll, however, showed a tough fight in at least one region. Aaj Tak exit poll showed that BJP will win 99 – 113 seats, getting a majority in the 182 member assembly. The Congress will get 68 – 82 seats, falli

GSL delivers fuel barge to Indian navy

Goa shipyard Limited (GSL) has delivered the second fuel barge to Indian Navy on December 2, 33 days ahead of contractual delivery schedule, and recently got inducted into the Navy. Navy was in the need of self-propelled 1000Ton fuel barges, with a view to fuel big ships like INS Vikramadity

HAL units can’t be allowed to be idle: Bhamre

 Minister of state for defence Subhash Bhamre has assured Hindustan Aeronautics Ltd (HAL) that work load for its Nashik unit will continue to flow even after Su-MKI manufacturing and production activities conclude in the next few years.  “HAL has the world class facilities and giv

INS Kalvari dedicated to the nation by PM

 Naval submarine INS Kalvari was dedicated to the nation by prime minister Narendra Modi on Thursday in Mumbai. INS Kalvari is a diesel-electric attack submarine built by the Mazagon Dock Shipbuilders Ltd for the Indian Navy. As per the plan, five more such submarines would be inducted into

Gujarat decides

People queued up since early morning to cast their ballot to decide the political fate of 851 candidates in the second and final phase of the bitterly fought Gujarat assembly elections. The votes in all the 182 seats will be counted on December 18. Over 22 million people are eligible to cast

Delhi’s air pollution answer may lie in distant Iceland

Had the situation not been so desperate, then the AAP government’s proposal to sprinkle water from helicopters would have been considered hare-brained. But, a more practical solution to tackling air pollution may well be around the corner and it lies in the success of a pilot project in Iceland.



Video

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter