Bank loans

Indian Overseas Bank Loans: Indian Overseas Bank Seeks Buyers for 344 Bad Loans

(IOB) is looking for buyers for its distressed loan portfolio which includes advances to Aban Holdings, Rotomac Global, Essar Group companies and subsidiaries of GVK and Lanco groups, two people with knowledge of the development told ET.

Last week, the bank released a preliminary list of 344 non-performing accounts with asset reconstruction companies (ARCs), the sources said. These accounts have total outstanding loans of ₹24,278 crore.

This is a preliminary list to gauge buyer interest. The Chennai-based bank has requested an expression of interest from the CRAs as well as an indicative offer price, one of the people quoted above said. The bank aims to clean up its books to attract investors, the people said.

Aban Holdings has outstanding loans of ₹1,271 crore, the largest account on the list. Two Essar companies are Essar Oil & Gas Exploration with ₹77.8 crore outstanding and Essar Power Gujarat with ₹148 crore. Other prominent accounts include Rotomac Global with loans of ₹750 crore, Frost International with ₹839 crore, Era Infrastructure (₹567 crore) and Vadraj Cement (₹521 crore).

IOB did not respond to ET’s request.

Three Lanco Group companies include Lanco Amarkantak (₹876 crore), Lanco Infratech (₹509 crore) and Lanco Babandh at (₹320 crore). The GVK Group accounts are GVK Deoli Kota Expressway and GVK Coal Developers with loans of ₹157 crore and ₹218 crore, respectively.

Almost all of the major loans on the list were sanctioned before 2015 “due to reckless lending to businesses without proper credit checks”, said a senior bank official who did not wish to be named.

The Reserve Bank of India had ordered Prompt Corrective Actions (PCA) on the bank in October 2015, preventing the lender from extending further business loans. For the 2016 financial year, the bank’s gross NPA was 17.4%, and after provisions, the NPA was 12%.

In September, after almost six years, the bank exited the PCA. It reported raw NPAs of 9.8%; after provisions, net NPA was 2.6% for FY22.