State Bank of India is considering offloading pools of non-performing retail loans worth less than Rs 1,000 crore ($132 million) to asset reconstruction companies, a strategy typically used for larger corporate loans.

SBI, which is the country's largest lender by assets, had gross non-performing assets of Rs 1,20,000 crore at the end of December, representing 4.5 per cent of its loan book, of which retail loans accounted for more than Rs 61,900 crore.

Selling a smaller portfolio of retail loans to asset reconstruction companies (ARCs) will help to test the market and also assess the depth of demand.

"We are going to evaluate selling pools of unsecured retail loans and also some retail small and medium enterprises portfolio, which is seeing a little elevated stress at this point in time, to ARCs or special situation funds," SBI Managing Director Swaminathan Janakiraman told Reuters on Wednesday.

"This will also essentially help to free our people engaged in chasing such small loans, which can then be used for recovery of larger corporate loans where chances of getting a better recovery exist," Janakiraman added in an interview.

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SBI also expects the country's bad bank, an ARC which is focused on resolving larger corporate soured loans, to start submitting binding offers for bad loans worth more than Rs 50,000 crore from Thursday.

Under guidelines by which the bad bank was granted its licence, it is expected to commence business by March 31. "We expect that the binding offers for the stressed assets from the National ARC is likely to be between 10-40 per cent of the total dues, which is typically what we realise via ARC sale," Janakiraman said, adding he was not unduly concerned by delays. ($1 = 75.7568 Indian rupees)

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