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SBI auctions assets to recover loans, but finds few takers
MUMBAI: State Bank of India (SBI), India’s largest lender, could only sell little more than a tenth of the value of the properties it had seized from defaulting
MUMBAI: State Bank of India (SBI), India’s largest lender, could only sell little more than a tenth of the value of the properties it had seized from defaulting loan borrowers, at a so-called mega auction conducted online recently.
The poor auction of properties that had been put up as collateral, will now join the list of failed sale of assets of industrialist Vijay Mallya, which SBI and a lenders consortium had attempted recently to recover outstanding dues from the liquor baron. Mallya owes around Rs 9,000 crore to banks.
On September 9, SBI conducted a mega auction of 1,190 properties of medium and small scale businesses across India. The reserve price of the properties was around Rs 2,664.35 crore, and the amount raised was Rs 300 crore. “You could say about 10% of the (value of) properties were successfully bid and a large part of the demand was for residential properties,” people connected with the auction told HT.
Of the 1,190 properties put on sale, 167 were residential properties valued at over Rs 114 crore.
“There is never a 100% success while selling such properties. They have the ‘NPA’ tag and hence potential bidders get sceptic,” another banker added.
Last March, SBI conducted its first such mega auction of properties worth Rs 1,200 crore. It could sell less than 40%, or only 124 properties, out of the total 350 that were up for sale; it fetched around Rs 90 crore. The response for industrial and commercial properties was not up to expectations.
“Residential properties see demand as they are sold online for everyone to see the prevailing market prices. The overcapacity and slowdown in the economy has led to a relatively tepid response to commercial properties,” said a senior SBI executive.
