Dena Bank plans to offload around Rs 500 cr NPAs to ARCs in Q4

State-run lender Dena Bank plans to sell Rs 400-500 crore of bad loans to asset reconstruction companies in the last quarter of the fiscal, a senior bank official said here today.
"We have already started the process and have identified which NPAs will be sold. In the fourth quarter we are planning to sell Rs 400-500 crore of NPAs to ARCs," the official told PTI, requesting anonymity.
So far in this fiscal, the bank did not sell any of its stressed assets to ARCs.
In August, the RBI had made norms tighter for asset reconstruction companies by asking them to pay upfront 15 per cent of the bid value of non-performing loans, against 5 per cent earlier.

The official said the new regulations may have some impact on the pricing and ARCs are likely to quote lower price.
For the banking system as a whole, the bad loan pain is mounting with the Q1 figure crossing 4.6 per cent. According to a report by the rating agency Icra, public sector banks' gross NPAs are estimated to touch 4.4-4.7 per cent by March 2015, as against 4.4 per cent as on March 2014 and 4.6 per cent as of June 2014.

Following the RBI guidelines, leading ARC Arcil has pruned its yearly bad loan buying target by 30 per cent to Rs 3,500 crore.

"This year, encouraged by the last year's sales, we were expecting that a lot of sales will come and that was also proved in the first quarter...But after August when the stake percentages has been increased to 15 per cent by the Reserve Bank, there has been a slowdown," Arcil managing director and chief executive P Rudran told PTI recently.
"The real issue is not 15 per cent. The issue is that there has to be a realistic assessment of the price at which you are selling. If you are selling at the right price, there is no problem," Rudran said.