PSU banks’ stressed asset sales falter on legal risks, valuation gaps

“The low success rate in bank-led stressed asset auctions is primarily due to limited investor appetite for distressed assets, legal and title-related uncertainties, and differences between bank valuation expectations and what buyers are willing to pay,” said a senior bank official on condition of anonymity. “Many properties are sold on an ‘as is, where is’ basis, often with only symbolic possession available to the bank, requiring buyers to undertake extensive due diligence and sometimes lengthy legal follow-up. Consequently, only a small pool of specialised investors participates in such auctions, and bids typically emerge only when assets are offered at significant discounts. This naturally limits both participation and successful resolution rates.”