Banks look to sell bad loans to clean up books

Here is the beginning of my post. And here is the rest of it.A number of banks are planning to put on the block loans with a face value of Rs 2,500-3,000 crore to clean their balance sheets before the fiscal year ends. State Bank of India, Punjab National Bank, Bank of Baroda, Union Bank of India, UCO Bank are among some of the banks that are keen on offloading poor quality loans from books. To being with, bidding for PNB’s loan portfolio opened on Monday. The bank is looking at selling 59 loan accounts with a face value of Rs 400 crore for cash and another 10 accounts for security receipts in return. State Bank of India is planning a circle-wise auction. The total face value of the loans is said to be Rs 1,000 crore. Bank of Baroda has invited bidding from December 13 for 100-odd loan accounts with a face value of Rs 400 crore. Union Bank of India has asked the bidders for only security receipts against the sale of bad loans. This would mean that only asset reconstruction companies (ARCs) can bid for the Union Bank’s auction. However, the size of the auction is very small - around Rs 100 crore - since this is the first experiment by the bank. Kolkata-based UCO Bank, too, is eyeing the market with the loan book of Rs 200 crore, but is it looking at a combination of both cash and SRs.