Indian Overseas Bank invites bids for sale of non-performing loans worth 11,500cr

Indian Overseas Bank: The release stated the list of NPAs also has the accounts of Jet Airways (India) Limited, Reliance Communication, Reliance Telecom, IL&FS Financial Services, and Future Enterprises.

Indian Overseas Bank (IOB), a state-owned lender, has announced an invitation for expressions of interest (EOIs) from asset reconstruction companies (ARCs) to purchase 46 non-performing loan (NPA) accounts valued at Rs 11,500 crore.

The bank aims to auction these assets as part of its ongoing strategy to improve asset quality and recovery outcomes.

Key Dates and Process

• EOI Submission Deadline: January 18, 2025
• E-Auction Date: January 30, 2025
• Due Diligence Period: January 10-28, 2025

Bids must be submitted on a full cash basis, with the bank setting a reserve price of Rs 2,290 crore for the auction.

Notable NPA Accounts

The portfolio includes loans from a consortium arrangement, with several accounts admitted under the National Company Law Tribunal (NCLT). Key NPAs listed include:

• Videocon Industries Ltd: Rs 900.82 crore
• Frost International Pvt Ltd: Rs 839.50 crore
• Rotomac Global Pvt Ltd: Rs 750.55 crore
• IVRCL Limited: Rs 620.93 crore
• Videocon Oil Ventures Limited: Rs 480.09 crore

Other significant accounts include Jet Airways (India) Limited, Reliance Communication, Reliance Telecom, IL&FS Financial Services, and Future Enterprises.

Strategic Focus on Recovery and Asset Quality

Ajay Kumar Srivastava, Managing Director and CEO of IOB, highlighted the bank’s efforts to enhance recovery outcomes by actively considering the sale of MSME and educational loan portfolios to ARCs.

This strategy aligns with the bank’s broader objective to improve its financial health.

Improvement in NPA Ratios

IOB has made significant progress in reducing its NPA ratios:

• Gross NPA Ratio: Declined from 11.69% (March 31, 2021) to 2.72% (September 30, 2024).
• Net NPA Ratio: Reduced from 3.58% (March 2021) to 0.47% (Q2 FY 2024).

The sale of these NPAs is a critical move for IOB to continue strengthening its balance sheet and enhancing financial stability.