ARCIL buys Saraswat's NPAs at 86% haircut

US-based Avenue Capital-backed Asset Reconstruction Company (India) (ARCIL) has bought nearly ₹400 crore worth of bad loans or non-performing assets (NPAs) of Saraswat Bank with a haircut of nearly 86%.

Saraswat Bank, one of the largest cooperative banks in the country, sold the NPA portfolio comprising retail and micro, small and medium enterprises (MSME) loans as a clean-up for future growth capital. The bank has concluded the sale of the NPA portfolio it had announced in the previous quarter.

Initially planning to sell assets amounting to ₹410 crore, Saraswat Bank later reduced the pool to ₹385 crore, seeking bids on a 100% upfront cash basis as it wanted to clean up its loan book for future growth. BOB Capital Markets was the process advisor.

“Saraswat Bank has been able to recover a decent 14% of the debt by selling the debt mainly because it belonged to legacy NPAs and some retail and MSME loans,” said a person close to the development, who did not wish to be identified.

Spokespersons of Saraswat Banks, ARCIL and BOB Capital Markets did not immediately respond to requests for comment.

The loans on sale were a pool of debt backed by security and the security enhanced the chances of better recovery.Several ARCs and NBFCs were in the race for the book, but the resulting Swiss auction with ARCIL’s base bid was uncontested.


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