Chennai-headquartered Indian Overseas Bank has put on sale Rs 11,500 crore of bad loans to asset reconstruction companies (ARCs) as part of a clean-up exercise.

The state-run bank is selling 46 non-performing loan accounts and has invited expressions of interest from the ARCs. 

The portfolio comprises accounts financed under a consortium arrangement. Some of these loans have already been submitted to the National Company Law Tribunal (NCLT) under the bankruptcy law.

The sale will be conducted through an e-auction under the open auction method on a portfolio basis. 

Prospective buyers can bid on a portfolio basis, individual accounts or groups of accounts, the bank said.

Eligible ARCs and other transferees can submit their EoI by January 18 to participate in the e-auction scheduled for January 30 in the case of 46 accounts.

The bank is also considering the sale of some MSME (micro, small and medium enterprises) and educational loan portfolios to ARCs in line with its strategy to enhance recovery outcomes and asset quality.

Indian Overseas Bank managing director and CEO Ajay Kumar Srivastava said when it comes to resolving stress, it wants to focus on value maximisation through recovery measures, including invoking SARFAESI actions, compromise settlements and sales to ARCs.

The bank's gross non-performing assets (NPAs) stood at 2.72% at the end of September last year, down from 4.74% a year ago and from a peak of 11.69% in March 2021.