L&T; Finance sells Rs 3463 crore NPAs to Phoenix ARC
In the single largest trade in bad loans involving a non-bank lender last fiscal, L&T Finance sells little over Rs 3400 crore from its stressed-assets portfolio to Kotak Mahindra Bank-backed Phoenix ARC Pvt in the last week of March, two people aware of the matter told ET. The sale comes as finance companies are brought within the purview of stricter bad-loan norms that apply to traditional lenders.
L&T Finance sold Rs 3,463 crore of distressed loan portfolio for Rs 1,120 crore under the conventional 15:85 structure, the people cited above said. Under this structure, the asset reconstruction company would pay L&T Finance 15% of the consideration upfront and redeem the security receipts (SR) as they recover dues from the defaulting borrowers.
The development comes within a few months of the Reserve Bank of India (RBI) introducing prompt corrective action (PCA) and stringent non-performing assets (NPA) classification norms for non-banking finance companies.
L&T Finance does not disclose its gross or net NPA to investors in its quarterly results. Its gross stage three (GS3) loans stood at Rs 4,866 crore, or 5.9% of the total loans, as of December 2021, the companys presentation to analysts showed. GS3 comprises loans due for more than 90 days and other stressed assets.
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