Bandhan Bank has announced it will sell non-performing assets (NPAs) and written-off loan portfolios worth nearly ₹7,000 crore — the largest such retail-loan sale by a private lender recently. The decision follows approval by the bank’s board, aiming to offload stressed micro-loans and other unsecured retail debt to outside entities.
📄 What Is Being Sold: NPAs + Written-Off Loans
- The NPA portion — loans overdue by more than 180 days — amounts to roughly ₹3,212.17 crore (as of 30 September 2025).
- The written-off loan portfolio adds another ~₹3,719.14 crore.
- In total, these portfolios sum up to ~₹6,931.31 crore — approximated as “nearly ₹7,000 crore.”
- The debts being offloaded largely come from microfinance-related retail lending: small businesses, agriculture loans, group loans, and emerging entrepreneurs under the bank’s “Emerging Entrepreneurs Business (EEB)” and “Aspiring Business Group (ABG)” segments
🔧 How the Sale Will Proceed: Swiss Challenge + Auction Routes
- The NPA portfolio (overdue loans) will be sold via a bidding process following the “Swiss Challenge” method.
- The written-off loans will be sold through an auction route to asset reconstruction companies (ARCs) or other permitted transferees.
✅ Why This Matters: Cleaner Balance Sheet & Risk Reduction
This move is significant for several reasons:
- It helps Bandhan Bank clean up its balance sheet by removing bad, non-performing and written-off loans — which weigh heavily on bank financials and profitability.
- It may improve the bank’s asset quality metrics, which investors watch closely; such a de-stress step could restore confidence.
- The sale also reduces ongoing risk exposure: by offloading delinquent retail/microfinance loans, the bank limits potential future losses.
For Bandhan Bank, which had recently seen pressure on its retail-loan and microfinance portfolio, this large-scale sale could help stabilise its financial footing. Business Standard
⚠️ What Are the Challenges and Implications
- The recovery from such sales is often much lower than the outstanding amount — ARCs or buyers typically purchase NPA portfolios at a discount. So the bank may realise only a fraction of the ₹7,000 crore as actual cash recoveries.
- Borrowers included in these portfolios — small businesses, agribusiness, micro-entrepreneurs — may face severe credit consequences, further affecting local economies and livelihoods.
- The quality of future lending and risk management practices at Bandhan Bank will come under scrutiny: stakeholders will watch whether this sale is a one-time clean-up or part of a larger shift in lending strategy.
🔭 What This Means for Investors and the Banking Sector
- For investors in Bandhan Bank shares: the NPA sale might be seen as a positive restructuring step, possibly improving stock sentiment if the sale boosts capital adequacy and reduces provisioning pressure.
- For the banking industry: this signals continuing stress in microfinance/retail-loan portfolios, and the need for prudent lending standards and closer risk monitoring.
- For the microfinance segment: large migrations of such NPAs to ARCs may consolidate distressed assets in specialised firms, potentially leading to stricter recovery practices or restructuring of micro-lending norms.
