The board of Ujjivan Small Finance Bank has approved to sell non-performing assets and written-off loans worth over Rs 270 crore to an asset reconstruction company, the bank said in an exchange filing.
The small finance bank has completed the sale for Rs 40.5 crore.
Sale of stressed loan portfolio was done through a swiss challenge method, which allows private players to accept contracts from the government, through the process of bidding.
This has come as the microfinance sector has been witnessing stress and overheating for the better part of this financial year.
Customer overleveraging, inability to repay and lending to customers with multiple fake ID cards are one of the reasons why the microfinance sector has been undergoing stress.
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