IOB to sell Rs 470-cr stressed loans to ARCs; account include that of fraud-hit Indian Technomac

Indian Overseas Bank (IOB) has put eight stressed loan accounts up for sale to asset reconstruction companies (ARCs) and other permitted transferees. The accounts carry principal outstanding of ₹470.38 crore as of September 30, 2026, and the combined reserve price is ₹318.55 crore, or about 68% of principal.

The steepest discount is on Indian Technomac Co Ltd (ITCOL), the Himachal Pradesh company at the centre of a major bank fraud case. IOB has priced the account at ₹25 crore against principal outstanding of ₹136.33 crore, which is 18 paise on the rupee.

The e-auction will be held on November 6 from 11.30 am to 12.30 pm, with unlimited five-minute extensions and bid increments of ₹0.20 crore. Bids must be on a 100% cash basis. That rules out security-receipt structures, under which ARCs typically pay banks only 15% in cash. Expressions of interest, along with a signed non-disclosure agreement, are due by November 3. Due diligence runs from October 29 to November 5.

The sale is listed as “Lot 2 during Q3 of FY 2026-27” in a notification dated October 28 from IOB’s Stressed Assets Management Department in Chennai. The bank also advertised it in Financial Express on Thursday.

The lot

Borrower	Branch	Principal o/s (₹ cr)	Reserve (₹ cr)	Reserve as % of principal
Indian Technomac Co Ltd	ARMB Delhi	136.33	25.00	18%
Padmaadevi Sugars Ltd (formerly SV Sugar Mills)	ARMB Chennai	120.78	110.00	91%
Helapuri Spinning Mills Pvt Ltd	ARMB Hyderabad	60.56	30.00	50%
Mulpuri Fisheries Pvt Ltd + Mulpuri Foods and Feeds Ltd*	Ring Road, Vijayawada	79.50 (48.04 + 31.46)	72.00	91%
UP Money Ltd	Ludhiana Main	35.05	35.05	100%
MNT Buildcon Pvt Ltd	ARMB Delhi	23.67	28.50	120%
Rasul Enterprises	Mylapore, Chennai	14.49	18.00	124%
Total		470.38	318.55	68%

*The two Mulpuri accounts will be sold together, and bidders must submit a single consolidated bid.

MNT Buildcon and Rasul Enterprises have reserve prices above their principal outstanding. The notification gives only principal figures. Total dues, including unpaid interest, are likely to be higher, and the reserve probably reflects the security available.

Fraud and wilful-default conditions

The notification includes conditions for accounts classified as fraud or wilful default. If a fraud-tagged loan is transferred, the buyer must take over the bank’s responsibilities for:

• continuous reporting and monitoring
• filing complaints with law enforcement agencies
• the proceedings that follow those complaints

For wilful-default accounts, the buyer must keep reporting the borrower as a wilful defaulter until the unrecovered balance plus the amount the bank wrote off falls below ₹25 lakh. The notification does not say which of the eight accounts carry these tags.

The winning bidder must also give a notarised affidavit that it has no link to the borrowers, promoters or guarantors, is not funded by them, and is eligible under Section 29A of the Insolvency and Bankruptcy Code. Under Central Vigilance Commission guidelines, if only one bid comes in, the accounts will be re-auctioned under the Swiss Challenge method, with the single bid as the base price. The sale is governed by the RBI’s November 2025 master directions on transfer of loan exposures.

ARC sales a small part of the clean-up

IOB’s investor presentation for the September quarter shows that ARC sales play a minor role in reducing its bad loans.

Gross NPAs fell to ₹4,114 crore (1.19%) at the end of September, from ₹5,078 crore (1.83%) a year earlier. Net NPAs were ₹544 crore (0.16%). The provision coverage ratio was 97.69% including technical write-offs and 86.79% excluding them.

Gross NPAs fell by ₹422 crore during the quarter:

• write-offs: ₹190 crore
• cash recoveries: ₹159 crore
• upgrades: ₹60 crore
• sales to ARCs: ₹13 crore

There were no ARC sales in the June quarter. Over the past five quarters, ARC sales totalled ₹156 crore, about 6% of the ₹2,622 crore reduction in gross NPAs. Write-offs over the same period came to ₹1,315 crore.

The principal in this one lot, ₹470 crore, is three times the bank’s total ARC sales over five quarters and equal to about 11% of its gross NPA stock. That suggests some of these accounts may already have been written off. IOB recovered ₹405 crore from technically written-off accounts in the September quarter, against ₹159 crore of cash recoveries from live NPAs.

Slippages ease

Fresh slippages fell 24% from a year earlier to ₹220 crore in the September quarter, though they rose from ₹195 crore in June. The quarterly slippage ratio was 0.07%. New bad loans now roughly equal what the bank recovers or upgrades each quarter: ₹219 crore in the September quarter.

By segment, MSME has the highest NPA ratio in the domestic book, at 2.14% (₹1,179 crore). The overseas book makes up 6.5% of advances but holds ₹1,404 crore of bad loans, about a third of the total, for an NPA ratio of 6.26%.

IOB’s net profit rose 56% to ₹1,912 crore in the quarter. Provisions rose 41% to ₹950 crore, of which only ₹142 crore was for NPAs.

The borrowers

ITCOL, based in Paonta Sahib, allegedly obtained loans between 2009 and 2013 using forged project reports and fictitious sales routed through shell companies. In April 2025, the Enforcement Directorate restored about ₹289 crore of attached ITCOL properties to a Bank of India-led consortium of lenders.

Padmaadevi Sugars is in liquidation under the IBC, according to IBBI records. Its insolvency began in October 2018. IOB’s 91% reserve on this account is unusually high for a company in liquidation.

UP Money Ltd, formerly Sukhjit Finance, is a Ludhiana-based lender offering two-wheeler and small business loans. IOB has priced its account at full principal.

Also See: PNB puts Rolta group’s Gurugram commercial property on the block at ₹250 crore reserve