Bandhan Bank's board of directors has given its approval for the sale of a significant portfolio of Non-Performing Assets (NPAs). This strategic move involves identified NPAs exceeding 180 days past due (DPD), specifically from the bank's housing finance segment.
Details of the NPA Portfolio Sale
The principal outstanding amount for the approved NPA portfolio stands at Rs 303.74 crore as of May 31, 2026. The sale process will be conducted through a competitive bidding mechanism involving various Asset Reconstruction Companies (ARCs). Bandhan Bank intends to utilize the Swiss Challenge method for this transaction, ensuring transparency and fair valuation.
Market Reaction and Analyst Insights
Following the announcement, Bandhan Bank's shares saw a slight increase, rising 0.57 percent to Rs 212.10 apiece at market opening. Market analysts, including SBI Securities, view this development positively for the bank's short-to-medium term financial health.
The bank recently reported its March quarter earnings, which showed lower-than-expected credit costs and stable operational growth. While deposit growth lagged credit growth at 10 percent year-over-year, the Current Account Savings Account (CASA) ratio improved significantly to 29.3 percent due to seasonal factors in current account balances. The bank's overall gross NPAs were reported at 3.3 percent.
During its earnings call, Bandhan Bank's management commented on NPA sales: "The ARC sale that we did in Q3 prior to that we did 3 years ago. So, it's not something that will be done every quarter. This is an option that is available for the bank. And we will look at it whenever we need to do any kind of an NPA management, but there are no immediate plans as of now." This indicates that such sales are strategic tools rather than regular occurrences.
Future Outlook and Strategic Focus
For the March quarter, Bandhan Bank experienced reduced slippages and credit costs, signaling a gradual reduction in stress within its Microfinance Institution (MFI) portfolio. HDFC Securities, in a Q4 review, noted that Bandhan Bank continues to prioritize shifting its loan mix towards more secured loans, enhancing the quality of its deposit franchise, and tightening its underwriting and compliance standards. However, they believe the path to regaining full regulatory credibility and achieving portfolio stability may be protracted.
Elara Securities, in a broader banking sector analysis, highlighted the resilience of MSMEs despite ongoing challenges like elevated costs, logistics pressures, and tighter working capital cycles. They maintained an 'Accumulate' rating on Bandhan Bank with a target price of Rs 220, suggesting confidence in the bank's underlying trends.