Seeking to reduce its non-performing assets, Indian Overseas Bank (IOB) has sold over Rs 1,600 crore exposure in Essar Steel to Edelweiss ARC.
The bank had two options — wait for the National Company Law Tribunal (NCLT) decision on the matter or to sell it to ARC — and it has taken a calculated decision, said bank’s officials.
The bank has lent the amount as part of a consortium and the matter is currently under NCLT’s consideration. IOB had earlier appointed a team of officials to look at such loans and find out the best way to recover from it.
If the bank goes through the NCLT route, it may have to take some haircut, the quantum of which is not known, but it would be a one-time final payment.
However, selling its exposures to ARC would give it an advantage of getting a better return, as the Essar projects have the potential to give better results over a period of time, said the official.
The bank is looking at all options, including selling the assets and the NCLT route for reducing the NPA burden, said an official on condition of anonymity.
In the recent past, the bank has been in the process of reducing the slippages and recovering NPAs.
Source: Business-Standard 