Bandhan Bank moves to clean up housing book with Rs 303 crore NPA auction

The private lender is looking to offload a specific chunk of its housing finance portfolio to asset reconstruction companies via a Swiss Challenge process.

Bandhan Bank is taking a decisive step to trim its bad loan pile, confirming plans to auction a portfolio of non-performing assets (NPAs) worth Rs 303.74 crore. The board of the private sector lender gave the green light for the sale in a regulatory filing, marking a strategic move to manage its asset quality more effectively.

The assets earmarked for sale are tied to the bank’s housing finance portfolio, specifically those that have been sitting with a ‘Days Past Due’ (DPD) status of more than 180 days as of May 31, 2026. By offloading these legacy stressed assets, the bank is clearly signaling a preference for a cleaner balance sheet over holding onto long-term defaults.

To ensure transparency and discover the best possible price for these NPAs, the lender has opted for the Swiss Challenge method. This bidding process will involve inviting various asset reconstruction companies (ARCs) to compete for the portfolio. The move is a standard, yet significant, industry practice that allows the bank to move bad loans off its books and recover as much capital as possible in the current market environment.

The bigger picture

This auction comes at a time when Bandhan Bank is navigating a period of financial transition. While the bank recently reported a robust 68% jump in standalone net profit to Rs 530 crore for the March 2026 quarter, the pressure to maintain healthy asset quality remains a priority for stakeholders. Investors watching the bandhan bank share on the exchanges will likely view this sale as a proactive measure to de-risk the loan book, especially given the recent volatility in the broader Nifty and banking indices.

For a bank that has been among India’s fastest-growing private lenders, the ability to recycle capital is crucial. By liquidating these Rs 303.74 crore worth of bad debts, the management is freeing up resources and reducing the carrying cost of these NPAs. It is a balancing act: sustain high growth while keeping the shadow of bad loans from looming too large over quarterly earnings.

The success of this auction will depend heavily on the appetite of ARCs, which have been increasingly active in acquiring retail and housing portfolios from banks. As Bandhan Bank moves forward with this sale, the market will be keenly observing the recovery value achieved compared to the principal outstanding. For now, the focus remains on execution—turning long-overdue debt into immediate liquidity to fuel future growth cycles.