IndusInd Bank has announced the sale of ₹1,573 crore worth of unsecured microfinance loans through a public auction. The decision comes amid persistent asset quality challenges in its microfinance book, which rising delinquencies across specific states have exacerbated. The bank has invited eligible bidders to participate in the auction, offering the loan pool at a reserve price of ₹85 crore, marking a recovery rate of just over 5%.
The loan pool being auctioned includes accounts from more than 10.61 lakh borrowers, all of which are unsecured with no collateral backing. IndusInd Bank has set the auction on a “100% cash basis,” as outlined in its official bid document. This approach mandates upfront payment for the loans, and the bank has opened the process to all qualified purchasers. However, asset reconstruction companies (ARCs) are expected to dominate the bidding process due to their expertise in dealing with distressed assets.
The reserve price for the auction has been set at ₹85 crore, which translates to a minimum recovery rate of 5.04%. While the low recovery rate highlights the challenges in the bank’s microfinance portfolio, it also reflects the significant deterioration in asset quality that the lender has experienced in recent quarters.
IndusInd Bank’s microfinance book has been under stress, with delinquencies concentrated in states like Bihar, Jharkhand, and Maharashtra. In the September 2024 quarter, the bank reported slippages in this segment amounting to ₹2,259 crore, an increase from ₹1,988 crore in the previous quarter. This rise in bad loans has forced the lender to reduce its growth in the microfinance segment.
As of December 27, 2024, 11:57 AM, the shares of IndusInd Bank are trading at ₹961.70 per share with a surge of 3.19% from its previous day’s closing price. Over the last month, the stock has seen a decline of 4%. While over the year the stock has declined by 39.80% the stock has a 52-week high and 52-week low of ₹1,694.50 per share and ₹926.45 per share respectively.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
We're Live on WhatsApp! Join our channel for market insights & updates
Get the link to download the App
