Commercial banks in India are expected to conduct over one lakh e-auction transactions during financial year 2013-14 to sell properties of non-performing assets according to NPAsource.com, a portal which focuses on resolution of stressed assets.
The portal said it expects residential, agricultural, commercial and industrial properties to be sold through the e-auction route, with the first two accounting for the largest number in terms of transactions.
With the Ministry of Finance making it mandatory for all commercial banks to move from physical auctions to e-auction mode for all NPA cases under the Debt Recovery Tribunal (DRT), there will be a spurt in e-auctions in 2013-14.
Also, the Ministry of Finance wants that NPAs under SARFEISI Act should gradually move to the e-auction mode, but has not made it mandatory.
Banking sector in India is currently under immense pressure as non-performing assets (NPAs) or bad loans grow irrepressibly.
The focus of most of the banks now is on recovering these dues as it has started impacting their profitability and margins. As on March 31, 2012, net NPAs of 40 listed banks were Rs 61,558 crore, which rose to Rs 92,398 crore as on December 31, 2012.
Explaining the advantages of e-auction over the physical process which used to be followed till now, DK Jain, CMD of Atishya Group, owner of NPAsource.com, said, "E-auctions offer multiple advantages like lower cost, greater participations, save time and allows better price realization for banks."
"Any interested party from India or even abroad can register themselves under the RBI regulations and participate in an e-auction of NPAs unlike the physical auction system where the interested parties have to travel to the venue where it is going to take place.
"This automatically leads to a significant increase in the number of participants, reduces costs and eliminates or curtails manipulation by a small cartelised group."
"The primary issue related to banks not engaging much in e-auction is the lack of technological know-how and competence. To capitalise on this, various online portals have started offering their technology and know-how to these banks for e-auction of NPAs," Jain said.
"However, the success of any portal would depend on how effectively the process is executed," he added.
As on March 31, 2013, the portal NPAsource.com had 23,000 plus registered properties worth over Rs 21,000 crore.