What Are NPAs?
NPAs full meaning is Non-Performing Assets, are loans where borrowers have stopped making payments. Mention how high NPAs can be risky for banks.
Ujjivan SFB’s NPA Sale – Details
Bengaluru-based lender Ujjivan Finance Bank LTD in November 2024, the bank decided to sell ₹270.35 crore worth of bad loans. This includes ₹62.36 crore of written off loans & ₹207.98 crore of NPAs(Non Performing Assets). As the bank had already set aside 85.61% as a provision for potential losses.
Reason behind Ujjivan SFB Sell NPAs:
- To Improve Asset Qualit; The bank’s Gross NPA ratio had risen to 2.52%, meaning more loans were turning bad
- Microfinance Challenges; Most of Ujjivan’s customers are small borrowers who faced difficulties in repaying loans
- To Clean Up Its Balance Sheet
How Does Selling NPAs Work?
Explain that banks sell bad loans to Asset Reconstruction Companies (ARCs), which try to recover the money. This helps banks focus on their main business instead of chasing defaulters.
Impact of the NPA Sale on Ujjivan SFB
- Lower NPAs, making the bank look more financially stable
- Improved profitability since fewer bad loans mean fewer losses
- Greater confidence from investors and customers.
Ujjivan Small Finance Bank's stock:
The price of the stock in today's market (2Mar, 2025) is 32.30 INR (-.98%). In the past 1 year, the bank is making less money stock market it is getting lower. At the end the question is, will this help the bank in the long run?
