IDBI Bank launches OTS scheme for retail NPA borrowers to boost recovery

IDBI Bank, a private sector lender, has introduced a special scheme to enhance its recovery from retail non-performing accounts.

The scheme offers a one-time settlement (OTS) provision to retail borrowers with a principal outstanding in the range of Rs 10 lakh to Rs 10 crore, subject to eligibility criteria.

The scheme – Sugam Rinn Bhugtan Yojana – aims to offer relaxed terms to retail borrowers whose loans have turned into non-performing assets (NPAs) as of March 31, 2021, and continue to be NPAs as of August 31, 2024. It provides a renewed opportunity to borrowers in distress who are willing to settle their dues and avoid legal entanglement.

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According to an IDBI Bank executive, the gross principal outstanding of such eligible accounts is about Rs 2,300 crore, and the number of borrowers is over 4,800. The portfolio is a combination of NPAs on books and written-off accounts. This scheme is an effort on the part of the bank to resolve long-pending cases, he said.

IDBI Bank’s gross NPA ratio in Q1FY25 stood at 3.87 percent, down 66 basis points (bps) sequentially, while its net NPAs stood at 0.23 percent, down 11 bps sequentially.

According to the terms of the scheme, the Mumbai-based private lender is offering a waiver of interest and expenses for all eligible accounts, except for the guaranteed emergency credit line, where the total dues have to be paid.

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Additionally, the bank is offering a haircut and concessions based on the availability of security coverage. The scheme is effective from September 2, 2024, and will conclude on March 25, 2025.

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