Ujjivan Small Finance Bank is planning to sell non-performing assets (NPA) worth Rs 270 crore to asset reconstruction companies (ARCs) as part of a balance sheet cleansing exercise. The bank’s board approved the plan last Friday. The bad loans, valued at Rs 270 crore, are from the bank’s microfinance portfolio, with Rs 208 crore classified as non-performing assets and Rs 62 crore written off. The bank has already made a provision of 85.61% on the pool of bad loans. The decision comes as the bank’s asset quality worsened during the second quarter, with the gross non-performing assets ratio rising to 2.52% and net NPA standing at 0.56%. The microfinance sector, which contributes 65% of the bank’s gross loan portfolio, has seen significant stress, with about 80% of fresh slippages coming from this segment. The bank aims to reduce its NPAs and improve its asset quality through this exercise.

Source: https://economictimes.indiatimes.com/industry/banking/finance/banking/ujjivan-small-finance-bank-to-sell-rs-270-crore-in-bad-loans-to-asset-reconstruction-firms/articleshow/115420805.cms?from=mdr