ESAF Small Finance Bank Limited has informed the Exchange regarding Board meeting held on Jun 18, 2025 - Sale of NPA and Technically Written Off Loans to ARC
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The board of ESAF Small Finance Bank approved the sale of a pool of non-performing assets (NPAs) and technically written-off loans worth ₹735.18 crore to an Asset Reconstruction Company (ARC). The pool includes ₹362.43 crore of NPAs and ₹372.75 crore of technically written-off loans. The bank has already set aside provisions covering 90.15% of this pool, meaning it has already largely accounted for the expected loss. The board has authorised the Asset Sale Committee to complete the sale process, and the bank will inform the exchange once the deal is finalised.
This is a routine NPA cleanup exercise, not a sign of fresh stress. Since 90% of the pool is already provisioned, the actual financial hit to the bank will be minimal. The sale should help clean up the balance sheet, improve asset quality ratios, and free up management bandwidth, which is mildly positive for shareholders.