Housing Development Finance Corporation (HDFC) is in the final stages to offload stressed loans of around Rs 2,000 crore extended to developers ahead of its merger with HDFC Bank, according to a report by The Economic Times.
HDFC’s asset quality has been improving in the past few quarters and it wants to sell the stressed loans before its merger with HDFC Bank which will create a financial behemoth. Its individual gross non-performing assets (GNPA) decreased from 0.99 percent to 0.75 percent as of March 31. Non-individual GNPA decreased from 4.76 percent to 2.9 percent.
These loans are spread across 7-8 accounts and reportedly include advances to the local owners of Radisson Blu properties. The mortgage lender is engaged in negotiations with asset reconstruction companies to sell these loans. Alvarez & Marsal, a consulting firm, is actively seeking potential buyers for the loans.
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The report says some of these loans might include NPAs while some may be stressed, but haven't formally been declared yet as NPAs. Moneycontrol couldn't independently verify the report.
During March, HDFC had showcased some of these accounts for potential sale but did not proceed due to lower-than-expected recovery prospects, the report mentioned. Omkara ARC bought the Rs 150 crore worth of outstanding loans of Matoshree Developers for Rs 50 crore, which entails a 33 percent recovery for HDFC.
During Q4, HDFC had received a bid from Omkara ARC for around Rs 1,100 crore pooled stressed assets but the bid value fell short of the mortgage lender's expectations, resulting in the sale not taking place, the report added.