Spring Cleaning at ESAF: Bank Sheds ₹733 Crore in Bad Loans, Gears Up for Growth

In a significant move to strengthen its balance sheet, ESAF Small Finance Bank has announced the successful sale of its non-performing assets (NPAs) and technically written-off loans to an Asset Reconstruction Company (ARC). This strategic transaction, finalized on June 30, 2025, follows the bank’s earlier board approval and disclosure dated June 18, 2025.

 

The bank revealed that the NPA portfolio, with an outstanding balance of ₹733.40 crore as of March 31, 2025, was transferred to the ARC for a consideration of ₹73.34 crore. The sale was conducted through the Swiss Challenge Method, a transparent bidding process that encourages competitive offers and maximizes recovery value for lenders.

 

This move is expected to improve ESAF Small Finance Bank’s asset quality and capital adequacy by offloading stressed assets from its books. The transaction aligns with regulatory guidelines under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ensuring transparency and compliance.

 

Key Highlights:

 

Portfolio Size: ₹733.40 crore (as of March 31, 2025)

 

Sale Consideration: ₹73.34 crore

 

Buyer: Asset Reconstruction Company (ARC)

 

Method: Swiss Challenge Method for competitive bidding

 

Objective: Strengthen balance sheet, improve asset quality, and comply with SEBI (LODR) Regulations

 

Previous Disclosure: Board approval for the sale was announced on June 18, 2025

 

The bank’s proactive approach to resolving stressed assets is expected to boost investor confidence and support its long-term growth plans.

 

Source:

ESAF Small Finance Bank Regulatory Filing