ESAF Small Finance Bank Limited has informed the Exchange about Sale of NPA and Technically Written Off Loans to ARC.
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ESAF Small Finance Bank's Board has approved selling a pool of bad and written-off loans worth ₹735.18 Crore to an Asset Reconstruction Company. This pool includes ₹362.43 Crore of NPAs (loans where borrowers have stopped paying) and ₹372.75 Crore of technically written-off loans (debts the bank had already given up on recovering). The bank has already set aside money to cover 90.15% of these loans, meaning most of the expected loss is already accounted for in its books. The Bank's Asset Sale Committee has been authorized to complete the procedural steps for the deal.
Since the bank has already provisioned over 90% of the loan value, the actual financial hit from this sale will be minimal. Shareholders should see this as a routine balance sheet cleanup that helps the bank focus on healthier assets, with little effect on near-term earnings.