Bandhan Bank Moves to Sell ₹6,931 Cr Bad Loans

Bandhan Bank has approved the sale of ₹6,931 crore worth of non-performing assets (NPAs) and written off loans, marking one of its biggest cleanup moves in recent years. These stressed portfolios come from two key segments, the Emerging Entrepreneurs Business (EEB) and the Aspiring Business Group (ABG), which include group loans, agriculture loans, and small-business lending. Out of the total amount, around ₹3,212 crore represents NPAs overdue by more than 180 days, while nearly ₹3,719 crore includes loans that have already been written off. The bank plans to sell the NPA pool through the Swiss Challenge method and conduct a regular auction for the written-off accounts.

This decision is important because the stressed book being sold is nearly as large as the bank’s entire gross NPA, which stood at around ₹7,015 crore as of September 2025. Bandhan Bank’s gross NPA ratio was around 5%, while net NPA was near 1.4%, showing that the lender has been actively provisioning for problem loans. Selling this large pool could help the bank lower risk, reduce balance-sheet pressure, and improve overall asset quality if sale values are reasonable.

The move also highlights continuing stress in micro-loans and small-business lending, especially in the EEB segment. In the latest quarter, Bandhan Bank made technical write-offs of ₹865 crore, with ₹799 crore coming from EEB. Gross slippages, new accounts turning into NPAs, also remained high at ₹1,590 crore, driven largely by micro-loans. These numbers suggest that the bank is still dealing with challenges in the small-ticket loan category.

Market reaction was slightly negative, with the stock closing around 1% lower, as investors awaited clarity on recovery values and the impact on future earnings. The actual benefit to the bank will depend heavily on the realization value, since a high haircut (large discount to book value) may limit the improvement. However, if recovery is strong and provisions get reversed, profitability could improve in coming quarters.

What happens next will depend on who buys these portfolios and at what price. A strong response from asset reconstruction companies (ARCs) and distressed-asset funds would signal confidence. After the sale, investors will closely track how much Bandhan’s NPA ratios improve and whether slippages stabilize. With this major step, the bank is aiming for a cleaner book and stronger financial visibility, but the final outcome depends on execution and recovery strength.