Bandhan Bank sells Rs 3,212 crore microfinance bad loans to ARCIL
Bandhan Bank has sold a ₹3,212 crore microfinance non-performing loan portfolio to ARCIL for ₹578 crore. This sale followed a Swiss Challenge process. The bank also initiated a process to sell an additional ₹3,720 crore in loans. These actions come as the bank's asset quality faced pressure from the microfinance segment.
Bandhan Bank has sold a microfinance non-performing loan (NPL) portfolio worth ₹3,212 crore to Asset Reconstruction Company (India) (ARCIL) for about ₹578 crore, people familiar with the transaction told ET.
The sale follows a Swiss Challenge process initiated by the bank after receiving a binding base bid from ARCIL. The portfolio comprised unsecured loans that were more than 180 days past due, with a principal outstanding of ₹3,212 crore as of September 30, 2025.
Bandhan Bank and ARCIL did not respond to ET's request for comment.
Under the Swiss Challenge structure conducted earlier this month, Bandhan Bank invited competing bids that were required to offer at least a 5% mark-up over the anchor bid, with a minimum cash component of 53.25% of the total bid value. The initial offer from ARCIL, pegged at ₹578.19 crore-around 18% of the outstanding principal-triggered the process. However, no rival bidders submitted qualifying offers in the second round, allowing ARCIL to acquire the portfolio, said sources.
Separately, Bandhan Bank had initiated a process to sell an additional outstanding of ₹3,720 crore, comprising group loans, small business and agri and small enterprise loans, for about ₹333 crore, the people cited earlier said.
As of September 2025, the bank's gross and net non-performing assets (NPAs) ratio stood at 5% and 1.4%, respectively. It was high mainly due to ongoing stress in the microfinance segment which has kept the bank's asset quality under pressure. As of March 2025, gross and net NPAs have risen to 4.7% and 1.3% compared with 3.8% and 1.1%, respectively, in March 2024.
"The efforts made by the bank in the past few years towards strengthening its underwriting policies and risk monitoring mechanisms and investments made in technology for higher efficiency and oversight are expected to benefit the bank's operations in the long run," Crisil had said in a note. "In the near to medium term, however, external challenges impacting the unsecured asset classes, particularly microfinance segment, remain a monitorable."