Canara Bank has moved to offload a significant stressed asset, inviting bids for the sale of its ₹577.47 crore debt exposure in Supreme Housing and Hospitality Private Limited. The Bangalore-based lender has set a reserve price of ₹500 crore for the auction. This move comes as the bank actively cleans its balance sheet amid a broader national trend that has seen India’s non-performing loan (NPL) ratio drop to a decade low of 2.4%. The debt sale will be conducted via a Swiss challenge auction, a process designed to maximize recovery by allowing an initial bidder to match or exceed subsequent higher offers. Canara Bank has already set a tight timeline for the process: - February 21: Deadline for submission of initial bids. - February 25: Expected declaration of the anchor bidder. - March 13: Electronic auction scheduled to challenge the anchor bid. This aggressive recovery effort follows the collapse of a one-time settlement (OTS) offer previously proposed by the real estate firm. Supreme Housing had offered a settlement of ₹450 crore in July, leading to a temporary withdrawal of insolvency proceedings. However, the company failed to honor the commitment, prompting Canara Bank to file a fresh petition with the Mumbai NCLT to restart corporate insolvency resolution. This marks the third attempt to resolve the company’s debt through settlement or insolvency. The borrower, a Mumbai-based developer known for residential projects and the Supreme Business Park, has struggled with liquidity and legal challenges for several years. Canara Bank’s proactive stance is reflected in its recent financial performance. As of February 2026, the bank's stock has shown resilience, trading near the ₹145–₹147 range. The lender reported a net profit of ₹4,752 crore in a recent quarter, up 22% year-on-year, supported by robust credit growth of approximately 12% across the Indian banking sector. The auction serves as a critical test of investor appetite for real estate debt. By simultaneously pursuing a debt sale and a bankruptcy petition, the bank ensures it can exit the exposure regardless of the NCLT’s timeline. Market observers view this as part of a wider strategy by public sector banks to reduce legacy bad loans. With the RBI projecting bad loan rates to drop as low as 1.9% by 2027, the successful offloading of the Supreme Housing debt would further strengthen Canara Bank’s asset quality profile.