State Bank of India, India’s largest bank has decided to e-auction seized properties worth Rs 1200 crore across 26 Indian cities. More than 350 properties which includes warehouses, office premises, residential complexes and small shops would be offered to potential buyers on March 14th. SBI is expected to cut atleast Rs 1000 crore worth of bad debt via this e-auction.
The cities where these seized properties of loan defaulters exist: Delhi, Mumbai, Kolkata, Chennai, Secunderabad, Pune, Bangalore, Ahmedabad, Lucknow, Aurangabad, Bhuwaneshwar, Indore, Cochin, Nagpur, Patna, Cuttack, Hyderabad, Vadodara, Varanasi, Siliguri, Raipur, Allahabad, Burdwan, Kanpur, Varanasi and Ludhiana.
This e-auction would be organized and conducted on three platforms: Magicbricks.com, e-Procurement Technologies Ltd and C1 India Pvt. Ltd. You can view all listed properties in these links mentioned. All these listed properties are part of collateral committed by loan seekers who later defaulted on their payments and were unable to repay the loan.
Their properties were seized under Security and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act by SBI. The defaulter is given a notice period of 60 days under the Sarfaesi Act, after which the properties are seized and auctioned.
This e-auction, hailed as India’s biggest till date conducted by a state owned bank to reduce bad debt, will be managed by the stressed asset management group at SBI, which actually deals with all cases of bad debts and troubled loans.
Parveen Kumar Malhotra, deputy managing director and group executive, stressed asset management group, SBI said, “We go for auctions on a regular basis but this would be the first time that we are doing such a large auction on a national level,” He also said that all properties would be available at a discount of 10% compared to the prevailing market rate of the said property, and online auction will help ‘cartelization’ of bidding by land mafia.
How Bad Is Bad Debt For SBI?
SBI has right now $10 billion (Rs 60,000 crore) worth of bad debt (which were previously labeled as restructured debts) mounting on them, and this rare national level auction of properties is being conducted to bring in to convert some bad debt into ready cash.
As per recent estimates, more than one tenth of all loans given by Indian Banks have defaulted, and as per India Ratings and Search (part of Fitch Agency), this may rise to 13% by March, 2016.
Indian banks in the quarter during January- March 2014 recovered around Rs 8443 crore from defaulters, which fell to Rs 667 crore during October – December quarter. In the last quarter, Indian banks received Rs 7043 crore worth of bad debt.
You can find complete details about SBI’s e-auction here.
