RBL Bank Sells Rs 800-Crore Stressed Credit Card Loans At 97% Discount

Private lender RBL Bank Ltd. has sold around Rs 800 crore worth of bad loans in a stressed asset deal, according to two people with direct knowledge of the matter.

The transaction was conducted at a discount of 97-98% of the gross book value of the assets, the people quoted above said. This implies a return of 2-3% for the bank.

The sold portfolio consisted of credit card loans that were in default for more than two years, the first person quoted above said. According to the person, most of these loans were written off accounts where RBL Bank had made full provisions. These were bad loans from the Covid era, where the lender had recorded higher defaults on the credit card portfolio.

According to a news report, Kotak Mahindra Bank purchased these assets from RBL Bank. NDTV Profit has not been able to independently confirm the buyer's name.

RBL Bank and Kotak Mahindra Bank didn't immediately respond to queries emailed on Wednesday.

The transaction will allow RBL Bank to clean up its retail loan portfolio and free up management bandwidth to focus on growing the book, the second person quoted above said. Such sales are part of regular business, this person added.

As of Sept. 30, RBL Bank's gross non-performing assets were Rs 2,441 crore, up 1.5% quarter-on-quarter. Non-wholesale bad loans were at Rs 1,328 crore. Credit card bad loans contributed Rs 443 crore or a third of the retail bad loans.

The Reserve Bank of India has been consistently flagging potential risks in the unsecured retail loan books of banks. In November, the regulator raised risk weights on such loans extended by bank and non-bank lenders to fortify balance sheet strength across the financial services industry.

As of November, outstanding credit card loans extended by banks were at Rs 2.45 lakh crore, up 34% year-on-year. In comparison, non-food credit for the system rose 21% from a year ago to Rs 155.8 lakh crore.