IDBI to sell 100b rupees of loans

MUMBAI: IDBI Bank Ltd, the lender with India’s worst badloan ratio, is seeking to curtail its soured debt by selling 100 billion rupees (RM5.73 billion) of stressed assets and stepping up efforts to recover dues from delinquent borrowers.

“We have set up a war room to focus on recovering the non-performing loans while another team is keeping a check on loans showing early signs of stress,” said chief executive officer Rakesh Sharma.

The lender wants to sell stressed loans “by end-June to quicken the pace of clean-up exercise”.

Burdened with the world’s worst bad-loan ratio, Indian lenders are stepping up efforts to recover delinquent debt after the Reserve Bank of India (RBI) announced tougher rules.

IDBI’s turnaround efforts gathered pace after Life Insurance Corp of India, the nation’s largest insurer, bought a controlling stake from Prime Minister Narendra Modi’s government. The insurer has infused more than 210 billion rupees into IDBI to bolster its risk buffers and bring it out of the regulator’s emergency programme that restricts lending.

IDBI would emerge from RBI’s prompt corrective action framework by September as the badloan ratio narrowed and profits rose, said Sharma.

Banks sanctioned by the regulator are restricted from lending and expanding their network while they mend their balance sheets. IDBI’s gross bad-loan ratio stood at about 30 per cent as of December 31, an exchange filing showed.