RBL Bank is currently considering the sale of credit card loans surpassing ₹800 crore and an MSME loan portfolio amounting to ₹300 crore, both potentially falling under the non-performing assets (NPA) category due to payment defaults. While there hasn't been a formal release of bid documents, the bank is actively assessing investor interest in these distressed retail credit card and small business loan portfolios.
Sources familiar with the matter indicate that the bank, without releasing a formal bid document, is testing the waters to gauge investor interest in these challenging retail credit card loans. Over the past two years, some of these loans have reportedly turned bad, prompting the bank to explore an all-cash sale.
Jaideep Iyer, Head of Strategy at RBL Bank, mentioned, "We are currently assessing investor interest in some bad loan portfolios, but the sale may not conclude in this quarter." Despite the focus on selling troubled loans, the bank has observed an overall improvement in its loan book, with net NPAs decreasing to 0.78% in the second quarter ending in September, down from 1% in the June quarter.
While facing challenges in certain loan portfolios, RBL Bank remains optimistic about its credit card business, witnessing a monthly issuance of 200,000 cards. Although the credit card business typically operates within a 5% loss range, challenges from the first and second waves of COVID-19 led to an accumulation of NPAs.
Strategically focused on diversifying its distribution base and increasing in-house origination, the bank's credit card business has exhibited signs of recovery. A recent Motilal Oswal report highlighted that the profitability of the business has improved, constituting 24% of gross advances as of the first quarter of FY 24.
To strengthen its position further, RBL Bank aims to expand its branch network by opening 70-80 branches in FY24, increasing the total count to 600 branches. Despite ongoing challenges, the bank has made notable progress in improving profits, diversifying operations, and extending key partnerships, such as the renewed collaboration with Bajaj Finserv for an additional five years in December 2021.
Sources familiar with the matter indicate that the bank, without releasing a formal bid document, is testing the waters to gauge investor interest in these challenging retail credit card loans. Over the past two years, some of these loans have reportedly turned bad, prompting the bank to explore an all-cash sale.
Jaideep Iyer, Head of Strategy at RBL Bank, mentioned, "We are currently assessing investor interest in some bad loan portfolios, but the sale may not conclude in this quarter." Despite the focus on selling troubled loans, the bank has observed an overall improvement in its loan book, with net NPAs decreasing to 0.78% in the second quarter ending in September, down from 1% in the June quarter.
While facing challenges in certain loan portfolios, RBL Bank remains optimistic about its credit card business, witnessing a monthly issuance of 200,000 cards. Although the credit card business typically operates within a 5% loss range, challenges from the first and second waves of COVID-19 led to an accumulation of NPAs.
Strategically focused on diversifying its distribution base and increasing in-house origination, the bank's credit card business has exhibited signs of recovery. A recent Motilal Oswal report highlighted that the profitability of the business has improved, constituting 24% of gross advances as of the first quarter of FY 24.
To strengthen its position further, RBL Bank aims to expand its branch network by opening 70-80 branches in FY24, increasing the total count to 600 branches. Despite ongoing challenges, the bank has made notable progress in improving profits, diversifying operations, and extending key partnerships, such as the renewed collaboration with Bajaj Finserv for an additional five years in December 2021.
