ESAF Small Finance Bank sold a ₹1,693.65 crore NPA and technically written-off loan portfolio to ARCs for ₹183.18 crore on December 29, 2025, via Swiss Challenge Method. This follows board approval on December 12, aiding balance sheet cleanup amid microfinance stresses.
ESAF Small Finance Bank completed the sale of non-performing and technically written-off loans worth ₹1,693.65 crore (as of September 30, 2025) to asset reconstruction companies for ₹183.18 crore on December 29, 2025, following the Swiss Challenge Method. This move follows the board's approval on December 12 and aims to strengthen asset quality. Shares closed marginally higher at ₹26.29, up 0.15%.
Transaction Overview
The Thrissur-based lender transferred the stressed loan portfolio after concluding the competitive bidding process mandated by SEBI regulations. The deal removes significant bad assets from the books, allowing focus on core operations and recovery by specialized ARCs.
Key Transaction Details
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Portfolio outstanding: ₹1,693.65 crore (cut-off September 30, 2025)
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Sale consideration: ₹183.18 crore aggregate
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Process: Swiss Challenge Method concluded December 29, 2025
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Prior intimation: Board approval reference 04/SE/CS/DEC/2025-26 dated December 12, 2025
Strategic Impact
This transaction represents ESAF's proactive asset quality management amid microfinance sector stresses. It aligns with earlier sales like the ₹735 crore portfolio in June 2025, improving provisioning coverage already at 94% for similar pools. The bank's Q2 FY26 deposits grew 5.93% YoY to ₹22,894 crore, with secured advances surging 62% to ₹11,711 crore.
Sources: CNBC-TV18, Business Standard