Bandhan Bank’s ₹6,931-Crore Bad Loan Sale Puts Stock in Focus on December 3, 2025

Bandhan Bank is pushing ahead with a major clean‑up of its loan book, planning to sell nearly ₹7,000 crore of stressed assets just as its stock trades under pressure and remains on traders’ radar on December 3, 2025.

Quick overview

Total stressed pool for sale: ₹6,931 crore (NPAs + written‑off loans) ^[1]
Type of loans: Mostly unsecured microfinance, small business and agri loans from Emerging Entrepreneurs Business (EEB) and Aspiring Business Group (ABG) segments ^[2]
Sale structure:
- ₹3,212.17 crore NPAs (over 180 days overdue) via Swiss Challenge bidding
- ₹3,719.14 crore written‑off loans via auction ^[3]
Timeline: Board approved the plan on November 27, 2025; bids are expected to be evaluated with results targeted around mid‑December 2025. ^[4]
Stock today (Dec 3, 2025): Bandhan Bank trades around ₹146–147, about 2% lower than the previous close, with an average broker stance of Hold. ^[5]

What exactly is Bandhan Bank selling?

Bandhan Bank’s board resolution on November 27 cleared a proposal to sell a large pool of stressed assets—both loans still on the books and loans already written off—through a competitive process involving asset reconstruction companies (ARCs) and other permitted buyers. ^[6]

Breakdown of the ₹6,931-crore pool

According to the exchange filing and subsequent coverage, the identified portfolios look like this: ^[7]

Non‑Performing Assets (NPAs):
- ₹3,212.17 crore
- Loans overdue by more than 180 days as of September 30, 2025
- To be sold using the Swiss Challenge method
Written‑off loans:
- ₹3,719.14 crore
- Already removed from the balance sheet, but recoveries still possible
- To be sold through an auction

Total: ₹6,931.31 crore in stressed assets.

Where do these loans come from?

All of this stress sits in Bandhan’s core retail and micro‑entrepreneur franchises: ^[8]

Emerging Entrepreneurs Business (EEB):
- Group microfinance loans
- Small business loans
- Agriculture‑related lending
Aspiring Business Group (ABG):
- Small enterprise loans positioned between microcredit and corporate lending

The EEB and ABG books together account for the largest share of gross NPAs and stressed assets in the bank’s portfolio, as highlighted in its Q2 FY26 investor disclosures. ^[9]

Economic Times’ banking coverage adds that the stressed pool being sold from the EEB vertical alone was about ₹5,860 crore, roughly 4.2% of Bandhan’s total assets under management of around ₹1.4 lakh crore as of September 2025. ^[10]

Why is Bandhan Bank cleaning up now?

Asset quality pressure has been building

Over the last few quarters, Bandhan’s microfinance‑heavy loan book has seen elevated slippages, particularly in the EEB segment. A sector‑focused analysis notes that slippages in microfinance remain high, prompting the bank to seek a decisive clean‑up rather than a slow grind through recoveries. ^[11]

Key numbers from Q2 FY26 (quarter ended September 30, 2025): ^[12]

Net profit: Around ₹112–114 crore, down almost 88% year‑on‑year (from about ₹937 crore).
Gross NPAs: About ₹7,020 crore at the bank level.
GNPA ratio: Roughly 5.0% of the loan book.
Credit cost: Jumped to ~3.4% versus around 2% a year earlier.

Within this, EEB stands out:

EEB GNPA: ~₹4,940 crore as of September 2025, up from the previous quarter.
EEB stress pool (NPA + SMA‑1 + SMA‑2): about ₹5,860 crore, the single largest stressed pocket in the bank. ^[13]

Strategic shift: from unsecured to secured lending

Bandhan has been signalling a business model reshuffle for some time:

Rating agency commentary shows the share of secured loans in the portfolio rising to 51% as of March 2025, up from 42% a year earlier. ^[14]
A recent strategic note on the bank’s loan‑book realignment says Bandhan aims to reduce EEB’s share in the book from ~42% to about 35% over the next two to three years, while increasing the proportion of secured lending—even at the cost of about 50 basis points of net interest margin. ^[15]

In its Q2 commentary, management described the quarter as “transitional”, linking weaker profitability to repo‑rate cuts, deposit repricing, and a deliberate tilt towards more secured assets. They also highlighted: ^[16]

Slower growth in the microfinance portfolio
A continuing increase in the share of secured advances
Efforts to grow low‑cost CASA deposits

Put simply, the NPA sale is not an isolated deal; it’s a big swing in an ongoing de‑risking plan.

How the sale will actually work

Swiss Challenge for NPAs

Under the Swiss Challenge approach, Bandhan will: ^[17]

Invite an initial “anchor” bid from an ARC for the ₹3,212.17‑crore NPA pool (180+ days overdue).
Disclose that bid and allow competing ARCs to offer a better deal.
Give the original bidder the right to match the highest competing offer.

This process is meant to maximise recovery value and comply with the RBI’s Transfer of Loan Exposures (TLE) guidelines, which govern how banks can sell stressed loans. ^[18]

Auction for written‑off loans

The ₹3,719.14‑crore written‑off portfolio—loans already removed from the balance sheet—is being sold via a more straightforward auction. Here, ARCs and other buyers bid for various pools, and Bandhan chooses the highest or most suitable offers. ^[19]

Because these loans are already written off, the sale primarily affects recoveries and cash inflows, not reported gross NPA levels.

ARC interest and possible pricing

Coverage from Business Standard and other outlets describes this as one of the largest microfinance‑heavy bad‑loan sales by a private‑sector bank, and notes that several ARCs are already evaluating the pool. ^[20]

Industry participants point out that large microfinance portfolios in India often clear at single‑digit or low‑teens percentages of face value, though this varies widely by geography, collateral, and historical collections. In fact, earlier ARC transactions have seen recoveries as low as 1% in extreme cases, while better‑quality retail pools have fetched around 40%. ^[21]

Where Bandhan’s pool finally prices will depend on:

Quality and seasoning of the underlying micro and small‑business loans
Legal enforceability and documentation
Regional dispersion and historical collection trends
Appetite and capital availability at ARCs

Bids are expected to be evaluated with outcomes targeted around December 13, 2025, according to one corporate‑action summary of the sale. ^[22]

What could this do to Bandhan’s balance sheet?

Potential impact on GNPA ratio

Using the bank’s own numbers as a rough guide: ^[23]

Current gross NPAs: ~₹7,020 crore
NPAs planned for sale (on‑book): ₹3,212.17 crore

If the entire on‑book NPA pool is successfully sold and there are no major new slippages or big swings in the loan book, Bandhan’s gross NPAs could mathematically drop to around:

7,020 – 3,212 ≈ ₹3,808 crore

On a loan book of roughly ₹1.4 lakh crore, that would imply a GNPA ratio falling from ~5.0% to roughly 2.7%.

That is a back‑of‑the‑envelope estimate, but it illustrates the scale of the clean‑up the bank is aiming for.

Profit and capital implications

The P&L impact will hinge on sale price vs. carrying value:

For NPAs, the bank may already have made substantial provisions. If sale proceeds exceed the net carrying value, Bandhan could book gains; if not, it may need to recognise additional hits.
For written‑off loans, any sale proceeds are essentially recoveries above zero book value, which would boost earnings in the period of the transaction. ^[24]

Given that provisions and contingencies in Q2 FY26 were already nearly double year‑on‑year, the sale effectively crystallises stress that markets have been pricing in for some time. ^[25]

Crucially, the deal doesn’t strain capital ratios directly; instead, it aims to clean up asset quality and free up management bandwidth for growth in secured and better‑rated segments.

How is the stock trading on December 3, 2025?

Price action and sentiment

As of the morning of December 3, 2025, Bandhan Bank shares are quoted around ₹146–147, about 2% lower than the previous day’s close of ₹149.75, according to real‑time market dashboards. ^[26]

Brokerage consensus, as summarised by LiveMint, pegs the stock at an average “Hold” rating, reflecting a divided view: analysts like the de‑risking story but remain cautious about execution, profitability, and the microfinance cycle. ^[27]

Featured in today’s “Trade Spotlight”

A Moneycontrol “Trade Spotlight” piece for December 3 flags Bandhan Bank among stocks showing notable price and volume activity. Technical analysis there notes: ^[28]

The stock is trading in a range‑bound “accumulation” zone after a downtrend.
A recent candlestick formation signals potential for a bullish reversal if key support levels hold.
The suggested short‑term trading strategy from one expert is buy‑biased, with a target near ₹160 and a stop‑loss around ₹144.

This shows that, at least from a trading standpoint, the market is actively trying to gauge whether the NPA sale can become a positive trigger rather than just an admission of stress.

How did we get here? Earnings context and sector backdrop

Bandhan is not alone: several microfinance‑focused and retail‑heavy lenders have grappled with post‑pandemic delinquency spikes, weather disruptions and regional concentration risks. Earlier quarters saw: ^[29]

Steep profit drops driven by elevated provisions at multiple banks with sizeable microfinance books.
Aggressive use of ARCs and the Swiss Challenge route across the sector to clean up legacy stress.
The establishment and use of the National Asset Reconstruction Company (NARCL) as a “bad bank” for large corporate exposures, pushing other ARCs to compete more sharply on pricing.

Historically, deals like Yes Bank’s ₹48,000‑crore ARC transaction and ARCIL’s purchases of stressed retail assets have helped banks reset their books, albeit often at heavy haircuts. ^[30]

Bandhan’s current move is, in many ways, its catch‑up moment—a large, visible clean‑up after a year where asset‑quality worries have repeatedly overshadowed its growth narrative.

What this means for investors and depositors

Potential positives

If the sale clears at reasonable prices and without major execution hiccups, it could:

Sharply improve reported asset quality, potentially taking GNPA ratios below 3% on a pro‑forma basis. ^[31]
Reduce future credit costs, as a large chunk of legacy stress gets transferred to ARCs.
Free up management focus for growing secured segments—housing, MSME, and other collateralised lending. ^[32]

For depositors, the transaction doesn’t alter deposit safety in a direct way; it’s about how loans are managed, not customer liabilities. The bank remains well‑capitalised, according to recent rating‑agency commentary. ^[33]

Key risks to watch

At the same time, there are important caveats:

Haircuts could be steep
- If ARC bids come in very low relative to carrying value, Bandhan may have to absorb additional losses, prolonging its earnings slump. ^[34]
Microfinance cycle is still fragile
- Elevated stress in the EEB and ABG books suggests that fresh slippages could continue, even after this sale. ^[35]
Growth vs. de‑risking trade‑off
- Shifting from high‑yield unsecured loans to safer secured assets typically compresses margins, and management has already flagged a possible ~50 bps impact on NIM. ^[36]
Execution timelines
- The sale needs to close on schedule, with documentation, due diligence, and regulatory approvals all moving smoothly. Delays could keep uncertainty elevated into later quarters. ^[37]

The road ahead: what to track after December 3

For anyone following Bandhan Bank—whether as a trader, long‑term investor or simply an industry watcher—these are the key milestones to monitor over the next few weeks and quarters:

Final bid outcomes and recovery rates
- What percentage of face value do ARCs pay for the NPA and written‑off pools?
- Is there enough competition in the Swiss Challenge to push prices higher? ^[38]
Pro‑forma asset‑quality metrics
- Updated GNPA and NNPA ratios after the transaction.
- The size of any remaining stress pool in EEB and ABG. ^[39]
Profitability trajectory in FY26
- How quickly do credit costs normalise?
- Does the shift towards secured lending translate into steadier but lower‑margin earnings, as management and analysts suggest? ^[40]
Market perception and valuation
- Whether broker ratings move away from “Hold” as clarity emerges on post‑sale metrics. ^[41]

Bottom line

As of December 3, 2025, Bandhan Bank is at an inflection point. The ₹6,931‑crore stressed‑asset sale is large enough to meaningfully reset reported asset quality, but its ultimate success hinges on pricing, execution, and whether the bank can prevent fresh stress from building up again in its micro and small‑business franchise.