State-owned Indian Overseas Bank (IOB) has sold its Bhushan Steel account to SSG Capital with write off amounting to less than 40 percent of debt.
Sources in IOB say the process should be complete by this weekend. SSG Capital was the largest bidder with Rs 376 crore. Other bidders, mainly asset reconstruction companies (ARCs), included Edelweiss, J M Financial and Pegasus.
Without disclosing the number, an IOB source said over 60 percent was recovered and this would help strengthen the balance sheet. The lender’s exposure to Bhushan was Rs 650-700 crore.
In the recent past, the bank has been in the process of reducing its high level of non-performing assets (NPAs). In September, it sold bad debt exposure of Rs 1,600 crore in Essar Steel to Edelweiss ARC at a 50 percent discount to the book value.
The bank’s gross NPAs at September-end were Rs 34,709 crore, about 22.7 percent of the total, as against Rs 35,453 crore or 23.6 percent at end-June. Recovery during April-September, the first half of this financial year, was Rs 6,750 crore, as against Rs 3,535 crore a year before. Recovery was higher than the slippages during the period.
Net NPA was contained at Rs 18,950 crore, a ratio of 13.86 percent as on end-September, as against Rs 20,765 crore and 14.3 percent a year before. The provision coverage ratio improved to 55.88 percent as on end-September, from 50.19 percent a year before.
Source: Business-Standard