SBI to organise e-auction to clean up its bad debt sheet

With an aim to cut down its $10 billion (Rs 62,500 crore) bad debt, the State Bank of India (SBI), which is India's largest money lender, will organise an online auction this weekend to sell repossessed flats, warehouses and offices worth a total of nearly $200 million (Rs. 1,250 crore). The information was revealed in a Reuters report.

This is will one of the biggest online sale in India till date. According to the leading news agency, the move is announced weeks before amendments in rule which will force banks to come up with a new strategy to deal with bad debts.

Global rating agency Fitch, which has dual headquarters in New York and London, has estimated that impaired loans India could hit 13% of the total amount by March 2016.

Since last two years, most of the state-owned banks in the country have registered an increase in bad loans as borrowers struggled to service loans due to the slow growth of the economy.

Owing to a jump in bad loans, debt-ridden banks are struggling eagerly to raise cash. And this even includes flash sales of repossessed properties.

According to Parveen Kumar Malhotra, a deputy managing director at SBI, who leads a special unit managing stressed assets, "We are now a lot more aggressive. We are in a better position to do all the things required, from (phone) calls to auctions and everything in between, including legal cases."