Putting bad loans on the e-block

Devendra Jain

NPAsource.com looks at more tie ups with public sector units

Every year properties worth hundreds of crore are seized by banks and financial institutions as their owners default on repaying the money they had borrowed from them.

Banks then auction these properties, which may not always fetch market prices. The problem is that not many people get to know about these auctions as banks don’t want to disclose details of their non-performing assets.

Now, there is a solution in the form of NPAsource.com, a portal for e-auction of NPAs of financial institutions. Devendra Jain, who founded it in 2011, has invested Rs 5 crore in this Ahmedabad-based company.

A chartered accountant by training, Jain came up with the idea while working with a metal company called Mercury Group in Ahmedabad in 2007. The Rs 100-crore group faced severe financial crisis and Jain helped the company go through a debt restructuring. The company turned around and now is making profits. Its current turnover is Rs 200 crore.

“The company’s revival was a great inspiration for me. During the restructuring process I had to visit many banks and sit with them for hours. I came to know that there were thousands of sick and defunct companies in India. I learnt that there was no common platform where all the stakeholders would come and solve this huge problem,” Jain said.

NPAsource was started with financial help from the Mercury Group, the company he helped revive.

First client

The first year was challenging as banks were not willing to share information on NPAs.

“I used to visit at least two banks every day but they would laugh off my idea saying that you are just wasting your time and it was not a good idea. I still met them and tried to develop contacts,” Jain said. The day came when SIDBI showed some interest in his idea and invested Rs 1 crore in the portal. Many banks such as SBI, IDBI, Bank of India, Indian Overseas Bank and Nabard are his clients. They have started putting auction notices of properties seized by them on NPAsource.

Jain said the commercial operations of the portal started in 2012. “Today, several banks are approaching us which is an achievement for me,” he said. In June 2012, the Finance Ministry notified that NPA properties can be sold online through e-auctions to maintain transparency and curb local cartelisation.

How it works

On how the portal works, Jain said that NPAsource gathers all information from the banks on their NPAs after which it analyses and cross checks the properties before listing them on the portal. These properties include residential, commercial and industrial.

How does NPAsource earn its income? Jain said to one can get basic information such as name, value, default amount and similar details about a property for free. But it charges for information such as legal incumbencies, revenue due, sales and excise tax attachments, any petition if filed. The company receives a commission on each property sold and provides consultancy to companies on corporate debt restructuring process.

Its gross annual turnover is about Rs 5 crore and Jain expects that to grow to Rs 20-25 crore in 2015.

“The NPA market size is pegged at Rs 2 lakh crore and is growing. We hope to cover 5-10 per cent of the market,” he added.

Jain has expanded his client base and is also moving into other cities such as Mumbai and Jaipur, his home town. He has opened associate offices in Delhi, Hyderabad, Indore, Raipur and Bangalore. It employs close to over 70 people across the country.

Jain said that he is looking at more tie ups with PSUs. He said that the growth in e-auctions is likely to be strong as bad assets of banks have grown significantly.

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Published on October 20, 2013

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