The distressed assets market in India is hotting up. New global distressed debt investors like Spinnaker, Cargill, Avenue and JC Flower are now entering India as investments in distressed assets has crossed the $1 billion mark.WL Ross, GE Capital and foreign banks like Standard Chartered, which have a presence in India and are globally active in the distressed assets market, are already active in India.After seeing the response of investors in stressed assets at recent auctions of bad loans, many Indian banks have joined the auction bandwagon, consulting firm PriceWaterhouseCoopers said in its latest report on "NPL (non-performing loans) Asia".PwC has helped Indian banks like ICICI Bank, HSBC, State Bank of India (SBI) and Punjab and Sind Bank sell outstanding principal loans of $997 million so far. Bad loans are normally sold at a discount as high as 80%. The distressed asset market has seen the largest bad loans auction by ICICI Bank. The country's largest private sector bank sold $330 million (over Rs 1,200 crore) of loans in an auction to Standard Chartered Bank. ICICI Bank had sold the loan assets with net value of Rs 258 crore at a loss of Rs 50 crore. These loans pertained to over 300 accounts.HSBC, too, sold about $80 million of bad loans of 29 accounts to the highest bidder JP Morgan. State Bank of India (SBI), the country's largest commercial bank, and its associate banks are the most prolific, though in small tranches."With impending implementation of Basel II norms from March 2007, increased emphasis on banks' asset quality, increasing demand for bank credit and consequently, increasing capital requirements, we expect to see many more NPL auctions in 2006-07," PwC said.
