India's Allahabad Bank seeks clearance to transfer bad loans from Hong Kong unit

It aims to sell its lone overseas branch in Hong Kong.

State-ran Indian lender Allahabad Bank is seeking the permission of the Reserve Bank of India (RBI) to transfer its bad loans from its Hong Kong branch to its Indian balance sheet as it aims to divest its good assets to other lenders, reports The Economic Times.

The Indian bank is in the process of winding up its lone overseas branch in Hong Kong and the transfer of the non-performing assets (NPAs) which is required for such seems to be taking more time than expected.

Also read: India lifts curbs on three public sector banks as recovery looms

“We are in talks with RBI to finalise the mechanism (for transfer of bad loans). This will happen only after March,” managing director SS Mallikarjuna Rao told The Economic Times.

The bank’s efforts to clamp down on its bad loans is part of its effort to boost its capital positions and exit the Prompt Corrective Action (PCA) framework.

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