ARCIL Acquires Saraswat's NPAs With 86% Haircut
Avenue Capital-backed Asset Reconstruction Company (India) (ARCIL), based in the United States, has purchased non-performing assets (NPAs) of Saraswat Bank worth nearly Rs 400 crores with a haircut of almost 86 per cent.
Saraswat Bank, one of the largest cooperative banks in India, has sold the NPA portfolio consisting of retail and micro, small and medium enterprises (MSME) loans to clean up its loan book for future growth capital. The bank had initially planned to sell assets worth Rs 410 crore but later reduced it to Rs 385 crore and invited bids on a 100 per cent upfront cash basis, with BOB Capital Markets serving as the process advisor. The bank has now concluded the sale of the NPA portfolio, which it had announced in the previous quarter.
According to a source aware of the development, Saraswat Bank has been able to retrieve 14 per cent of the debt by selling it. This was possible because the debt belonged to older NPAs and some retail and MSME loans. However, representatives from Saraswat Bank, ARCIL and BOB Capital Markets did not provide any comments on the matter.
The loans that were put up for sale were supported by security, which increased the chances of better recovery. Although a number of ARCs and NBFCs showed interest, the auction resulted in ARCIL's base bid being the only one.
