ESAF Small Finance Bank Limited has informed the Exchange about sale of NPA and Technically written off loans to Asset Reconstruction Company (ARC)
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ESAF Small Finance Bank has completed the sale of its non-performing assets (NPAs) and technically written-off loan portfolio to an Asset Reconstruction Company (ARC). The portfolio had an outstanding value of ₹733.40 Crore as of March 31, 2025, and was sold for ₹73.34 Crore through the Swiss Challenge Method, representing a recovery of about 10%. This follows the Board's earlier approval communicated on June 18, 2025. The transfer was concluded on June 30, 2025.
The sale helps the bank clean up its balance sheet by removing stressed assets, which could improve asset quality ratios and free up provisioning. However, the steep 90% haircut on the outstanding value signals significant credit losses, and the stock may react neutrally to mildly negatively in the short term.