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SBI exploring new ways to resolve retail loan stress

March 31, 2022

SBI exploring new ways to resolve retail loan stress
State Bank of India is considering offloading pools of non-performing retail loans worth under 10 billion rupees ($132 million) to asset reconstruction companies, a strategy typically utilized for larger corporate loans.

SBI, which is India’s largest bank by resources, had gross non-performing assets of 1,200 billion rupees toward the end of December, addressing 4.5% of its loan book, of which retail loans accounted for more than 619 billion rupees.
 
Selling a smaller portfolio of retail loans to asset reconstruction companies (ARCs) will assist with testing the market and also assess the depth of demand.
 
“We are going to evaluate selling pools of unsecured retail loans and furthermore some retail small and medium enterprises portfolio which is seeing a little elevated stress now to ARCs or special situation funds,” SBI Managing Director Swaminathan Janakiraman told Reuters.
 
“This will likewise basically help to free our people engaged with pursuing such small loans which can then be used for recovery of bigger corporate loans where chances of getting a better recovery exist,” Janakiraman included in an interview.
 
SBI likewise expects the nation’s bad bank, an ARC that is focused on resolving large corporate soured loans, to begin submitting binding offers for bad loans worth more than 500 billion rupees from Thursday.
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