Bandhan Bank Offloads ₹6,872 Crore of Bad Loans in Major Balance Sheet Cleanup

Bandhan Bank has completed a significant portfolio cleanup by selling non-performing and written-off loan portfolios worth ₹6,872.36 crore to asset reconstruction companies (ARCs) for a total consideration of ₹901.72 crore. The bank sold: ₹3,165.25 crore of unsecured NPAs to ARCIL for ₹569.75 crore, with the deal structured via security receipts under the Swiss Challenge method. ₹3,707.11 crore of written-off loans to Phoenix ARC Pvt. for ₹331.97 crore, following an auction process. Both portfolios were from its Emerging Entrepreneurs Business segment, comprising unsecured loans like group lending, small business, agriculture, and aspiring entrepreneur financing. In each transaction, Bandhan retained a portion of the security receipts (46.75% in ARCIL, 62.16% in Phoenix ARC), allowing it to benefit if recoveries exceed expectations. The move reflects the bank’s strategic effort to de-risk its balance sheet and focus on core lending. Post-transaction, shares rose 0.67% to ₹146.05, outperforming the market, though down 8.18% YTD. Analysts remain divided, but the cleanup could support improved asset quality and investor sentiment going forward.