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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AI summary

ESAF Small Finance Bank has transferred its portfolio of Non-Performing Assets (NPAs) and Technically Written-Off loans to Asset Reconstruction Companies (ARCs). The portfolio had an outstanding value of ₹1,693.65 Crore as of September 30, 2025, and was sold for an aggregate consideration of ₹183.18 Crore through the Swiss Challenge Method on December 29, 2025. This means the bank recovered approximately 10.8% of the total outstanding amount. The sale follows the board's approval granted earlier on December 12, 2025. This is a standard banking exercise to clean up the balance sheet.

Likely market impact

This sale helps ESAF Small Finance Bank clean up its stressed assets, strengthen its balance sheet, and free up capital that was locked in bad loans. The cash recovery of ₹183.18 Crore will improve liquidity, though shareholders should note a likely one-time accounting hit on the difference between outstanding and realised value. Overall, this is a positive step for future asset quality and profitability.