Bandhan Bank to Sell INR 775 Crore Home Loan Portfolio to Arcil for INR 280 Crore

Bandhan Bank's Portfolio Sale to Arcil

Bandhan Bank is set to divest its ₹775-crore affordable home loan portfolio, selling it to Avenue Capital-backed Asset Reconstruction Company India (Arcil) for ₹280 crore. This all-cash transaction is a strategic decision by the bank, reflecting the financial pressures faced by lower-income groups who struggle to repay home loans ranging from ₹10-12 lakh.

The sale was finalized during an unchallenged Swiss challenge auction on December 27, showcasing Arcil's successful bid.

Both Arcil and Bandhan Bank have remained tight-lipped, not responding to media inquiries for comments.

Recovery Rates and Banking Sector Trends

For Bandhan Bank, this portfolio sale translates to a recovery rate of 36%. This move is part of a broader trend observed in the banking sector, where other private lenders like RBL Bank, IndusInd Bank, and Yes Bank are also exploring the sale of their retail and MSME portfolios, collectively valued at over ₹2,900 crore.

Similarly, IndoStar Capital Finance is in the market to offload its ₹292-crore stressed retail book, with a reserve price set at ₹271 crore.

Diverse Portfolios on Offer

RBL Bank has opened the bidding for its ₹1,100 crore retail and MSME pool, comprising a substantial credit card and loan portfolio. IndusInd Bank is also in the process of selling a ₹700 crore loan pool, which includes credit card and personal loans. Yes Bank, on the other hand, is seeking buyers for its ₹1,143-crore retail portfolio, encompassing personal and vehicle loans, among others. The three banks have not disclosed any reserve price for these sales.

Breakdown of Individual Bank Portfolios

RBL Bank’s offer includes a ₹750 crore principal credit card portfolio and a ₹350 crore MSME segment loan portfolio. Yes Bank’s portfolio is diverse, comprising personal loans, vehicle loans, credit cards, commercial vehicle loans, construction equipment loans, and loans in the healthcare and hospitality sectors, along with microfinance and business loans. Bandhan Bank’s portfolio for sale is a segment of the ₹16,663 crore loan book it acquired from Gruh Finance in 2019, a purchase originally made from HDFC.