Avenue Capital-backed Asset Reconstruction Company of India (Arcil) has acquired nearly ₹1,100 crore in small-ticket loans from RBL Bank and Bandhan Bank in two separate transactions, said people aware of the matter.
RBL Bank sold small business loans worth ₹360 crore for ₹20 crore in an all-cash deal at an auction to the ARC, equating to less than 1% recovery. Separately, Bandhan Bank sold a ₹719-crore home loan portfolio for ₹289.6 crore at a Swiss auction, equating to a 40% recovery for the bank. Both transactions closed in the last week of December.
Arcil gave a binding offer of ₹280 crore for Bandhan Bank’s ₹775 crore affordable home loan book as of September 30, 2023. Its offer triggered a Swiss challenge auction. Under the Swiss challenge auction, the anchor bidder has the first right to match counter offers.
Kotak Mahindra Bank made an improved offer of 40% of the outstanding dues during the auction, but Arcil, the anchor bidder, matched the offer.
Arcil, Bandhan Bank, RBL and Kotak Mahindra Bank did not respond to ET’s request for comment.
Bandhan Bank eventually sold ₹719 crore of loans – the outstanding due as of December 28 versus ₹775 crore due on September 30. It comprised loans ranging between ₹10 lakh and ₹12 lakh.
The difference in the outstanding dues is primarily because the bank recovered loans from some borrowers in the last quarter of December.
According to a bank official, delinquencies in the affordable home loan segment show stress at the bottom of the pyramid, since this income group is the most vulnerable to the risk of job loss and inflation.
There has been a sharp rise in the sale of small-ticket retail loans to ARC in recent months. For instance, Kotak Mahindra Bank acquired a ₹793-crore credit card portfolio from RBL Bank at a steep discount, as was reported by ET on January 3.
Arcil bought a distressed gold loan portfolio worth ₹725 crore from Muthoot Finance, as was reported by ET on October 26 last year.
