Bandhan Bank has several loans that borrowers have not repaid for a long time. These unpaid loans are known as Non-Performing Assets (NPAs) meaning borrowers have stopped paying, or written-off loans meaning (the bank doesn’t expect to recover them easily). Together, their value is about ₹6,900 crore.
Since the bank is unlikely to recover the money directly from the original borrowers, it has decided to sell these bad loans through an auction. In such auctions ARCs (Asset Reconstruction Companies) or investors bid to buy these loans at a discount. They then attempt to recover the money themselves, as these companies specialize in loan recovery.
How is the bank planning to proceed?
They will use two methods:
1. Swiss Challenge Method (for NPAs)
NPA loans worth ₹3,212.17 crore, which have remained unpaid for more than 180 days, will be sold using the Swiss Challenge Method.
This process works like a competitive bidding game. First, one company makes an initial offer. Then, other companies have the opportunity to submit higher bids to beat that offer. Even the first company gets a chance to match the best offer. This method ensures that the bank receives the highest possible price for its loans.
2. Auction (for written-off loans)
Written-off loans worth ₹3,719.14 crore will be sold through a regular auction, where buyers bid and the highest bid wins.
What categories of loans are part of this sale?
The loans that Bandhan Bank is selling come from two main groups:
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EEB (Emerging Entrepreneurs Business)
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These loans are primarily group loans, where a group of borrowers jointly takes responsibility for repayment.
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They also include small business loans for local entrepreneurs and agricultural loans to support farmers and farm-related activities.
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Essentially, EEB loans are aimed at helping small-scale entrepreneurs and farming communities grow their businesses.
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ABG (Aspiring Business Group)
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These loans are given to small and growing businesses, helping them expand operations or manage working capital.
- ABG loans focus on businesses that have potential for growth but need financial support to scale up.
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Why is the Bank doing this?
By selling these bad loans:
- Bandhan Bank can remove them from its books.
- It gets some money back.
- The bank’s financial statements look cleaner and healthier.
- It can focus more on giving out new loans.
Bandhan Bank is struggling with a lot of bad loans, and its profits have dropped sharply. To fix this, the bank is planning to sell those bad loans to recovery companies. Even though profits fell, the bank is still growing in terms of total loans and deposits.
The bank’s profit for July–September 2025 fell by 88% to just ₹112 crore, much lower than what analysts expected. Net interest income, earns from loans (after paying interest on deposits) fell by 11.8%.
