"We bought Rs 405 crore (Rs 4.05 billion) principal dues from ICICI. This includes Rs 284 crore of bad home loans. That apart, nearly Rs 400 crore dues from NHB were also bought," ARCIL's vice president Gurudas Saha told PTI.
"We are also in talks with 2-3 banks to buy their bad loans. These include two public sector banks (PSBs)," he said. Saha, however, would not divulge the identities of these banks.
ICICI bank's home loan non-performing assets (NPAs) stand at around one per cent of its total home loan portfolio. When contacted, ICICI senior general manager Rajiv Sabharwal confirmed the deal.
"Bad loans worth nearly Rs 300 crore (Rs 3 billion) were sold to ARCIL. In a mature market, it is important to encourage new business markets. If players like us don't enter, nobody will enter the market," Sabharwal said.
ICICI, which is understood to have transferred only a part of its bad loans, will also look into the possibility of selling more bad loans in future, Rajiv said. The bank has an in-house valuation system of bad loans through CRISIL, which is the Indian Subsidiary of Standard & Poor's.
"If we are getting a decent value for the non-performing loans, we will surely look into that possibility," Rajiv said. However, "this doesn't mean that our NPAs are growing," Rajiv said, adding that "NPA sales are just like any other market deals, where the buyer expect a decent value for the product."
Sale of bad retail loans, which is a novel trend in the country's banking sector, is expected to pick up momentum, as more players have shown interest in shifting their bad loan risks, Saha said.
"Several banks are now keen to sell their retail NPAs. This is indeed a good response to the retail bad-loan market," he said. Arcil had acquired non performing loans worth Rs 2,55,170 crore (Rs 2551.70 billion) in FY06 from various institutions.
