The public sector banks will give up at least Rs 2000 crore of non-performing assets during the current fiscal as the market for bad loans is gaining momentum. Three banks have already started negotiating with asset reconstruct companies to line up the bad asset.
According to the bankers, Mumbai-based IDBI bank is deciding to sale Rs 200 worth of non-performing asset and Central Bank is also put Rs 540 crore of bad assets on sale. UCO bank, Kolkata based lender is also negotiating with asset reconstruction companies to sale Rs 380 crore of bad assets.
As cash receipts will directly affect their profitability so the bankers pointed that they will go for cash receipts rather than security receipts for the sale of the bad assets. Most of the non-performing assets belong to mid corporate accounts which are put up for sale. As asset reconstruction companies are not keen on accepting cash deals, it resulted in fewer transactions.
The cash deals of NPAs has slowed down in last few years as RBI has introduced strict norms by Reserve Bank of India.
Recently, biggest deal of bad loans took place when Barclays sold its non-performing credit card profile to Kotak Mahindra Bank.