Bandhan Bank announced on December 30 the sale of its stressed loans worth Rs 8,897 crore to Asset Reconstruction Corporation (ARC) for Rs 801 crore.

“Under the Swiss Challenge Act, the bank has allocated to ARC its technical write-off portfolio of Group Loans and Small Business Agricultural Loans (SBALs) totalling Rs 8,897 crore for a total consideration of Rs 801 crore based on securities receipt consideration,” it informed the stock exchange.

“ARC with investors subscribed for 51.70% of the proceeds of the securities amounting to Rs 414.04 crore while Bandhan Bank subscribed for 48.30% of the proceeds of the securities amounting to Rs 386.96 crore,” the regulatory filing added.

The bank’s board of directors approved the plan to transfer non-performing assets (NPAs) to ARC on December 21.

A person familiar with the matter told news agency PTI last week that since the bank was established in August 2015, SBAL, or small advance payments, has come under pressure at various stages of its operations. The person said this is the first time the bank has sold a stressed loan to ARC.

Under the Swiss challenge law used to sell stressed loans, banks receive bids for reserves, and the highest bidder gets the portfolio.

Bandhan Bank has also written off microcredit facilities totalling Rs 3,535 crore in the second quarter of the current fiscal.