Bandhan Bank Sells ₹6,872 Cr Stressed Loans to ARCs

Mumbai, December 29, 2025: In a significant move to clean up its balance sheet, Bandhan Bank Ltd. has announced the completion of the sale of two large portfolios of stressed assets to Asset Reconstruction Companies (ARCs). The deals, disclosed to the stock exchanges on Monday, involve a combined principal outstanding amount of ₹6,872.36 crore.

The bank informed the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) that the sale was executed as per the board approval received in November. The stressed assets primarily belong to the Emerging Entrepreneurs Business (EEB) and Aspiring Business Group (ABG) segments.

Breakdown of the Two Deals:

1. Sale of Unsecured NPA Portfolio to ARCIL:

Portfolio: Non-Performing Assets (NPA) overdue by more than 180 days.
Principal Outstanding: ₹3,165.25 crore (as of November 30, 2025).
Buyer: Asset Reconstruction Company (India) Limited (ARCIL), selected as the winning bidder under the Swiss Challenge Method.
Sale Consideration: ₹569.75 crore, to be settled via Security Receipts (SRs).
Key Detail: Bandhan Bank will retain a substantial 46.75% stake (₹266.36 crore) in the SRs issued against this portfolio, while ARCIL holds 53.25% (₹303.39 crore).

2. Sale of Written-off Loan Portfolio to Phoenix ARC:

Portfolio: Loans already written off from the bank’s books.
Principal Outstanding: ₹3,707.11 crore (as of November 30, 2025).
Buyer: Phoenix ARC Private Limited, emerging as the highest bidder in an auction.
Sale Consideration: ₹331.97 crore, also on an SR basis.
Key Detail: In this transaction, Bandhan Bank retains an even larger share of 62.16% (₹206.37 crore) in the SRs, with Phoenix ARC subscribing to 37.84% (₹125.60 crore).

What This Means for Bandhan Bank:

Analysts view this as a strategic step by Bandhan Bank to accelerate the resolution of legacy stressed assets, particularly from its group loan and microfinance segments, which have faced challenges. By moving these assets off its books, the bank can potentially improve its reported Gross NPA and Net NPA ratios, leading to a cleaner financial profile for future growth.

However, the bank’s decision to retain a significant portion of the Security Receipts (46.75% and 62.16%) indicates a shared interest in the eventual recovery value from these portfolios. The bank’s future earnings will be impacted by the actual recoveries made by the ARCs on these pools of assets.

The Road Ahead:

The success of this cleanup exercise will hinge on the recovery efficiency of ARCIL and Phoenix ARC. The move aligns with broader trends in the Indian banking sector, where banks are increasingly partnering with ARCs to manage stressed assets, allowing them to focus on core lending activities while specializing recovery operations.

The disclosure was made under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and has been uploaded on the bank’s website.