The Silicon Review ^Asia

IDFC, the private banking company has cleared NPA’S to cope up with the pending merger with Capital First, a non-banking finance company. The bank sold its stressed assets at a very lower price to Edelweiss Asset Reconstruction Company. The total worth of the assets was Rs. 2400 but was being sold for Rs. 622.6 Crore (75% loss).

Two separate transactions were carried out to sell the assets. In August this year, the bank sold loans worth Rs. 2,335 crore to a pool of 12 different companies which also included Coastal Projects, Monnet Power, GMR Rajahmundry and GKV Gautami. But, the loan was sold at Rs. 621 crores. Another loan of worth Rs.70.45 crore was sold to DS Group at Rs.1.6 crore (98% discount), and in February,the bank sanctioned a loan of Rs. 40 crore to DSC.

The net value of the 12 pooling accounts were Rs. 683 crore as the bank made a provisioning of Rs. 1,652 crore. The transaction process was over in August. The bank made a new provision of Rs. 62 crore after the transaction process because of a low realisation value (the value was lower than the net value).

In the course of three years, IDFC bank has worked hard to boost and transform its balance sheet in a fundamental manner, which involved two folded approaches – clearing up the NPA’s and diversifying risks, so as to create a balanced portfolio.