Corporate Debt Restructuring hits record high

Debt restructuring through the Corporate Debt Restructuring Cell (CDR) in fiscal year 2012 was the highest since the forum was launched in 2001, according to data obtained from a CDR source. The number of CDR cases jumped to 84 during the year, compared with 49 a year earlier.

Banks bring cases to the CDR, an informal Reserve Bank of India-approved forum of bankers, to negotiate relaxed repayment terms with struggling borrowers.

Cases brought to the CDR during the year included big-ticket loans to telecom tower services provider GTL Ltd , shipbuilder Bharati Shipyard , Hindustan Construction Co and several sugar and steel mills.

"There were many large-ticket loans last year. That is why the number is so huge," the source said, declining to be identified because the data was not yet public.

Banks filed 18 new CDR cases worth USD 1.12 billion in April 2012. The number of cases is a record for a month, although the value is not, the source said.

"Most of these are small-ticket loans. None of them are heavy like last year," the source said.

Non-performing loans at Indian banks increased to 2.9% of the total at the end of December, from 2.3% in March 2011, according to central bank data. Ratings agency CRISIL expects bad loans to rise to 3.2% of the total by March 2013.

Indian banks refer a case to CDR only when the loan is part of a consortium or syndication. Loans can be restructured outside of CDR as well, as was the case with Air India's USD 4 billion loan in late in 2011.

CRISIL expects loan restructuring in India to rise to USD 37.5 billion, or 3.5% of total loans, by March 2013, with large corporate exposures forming the major chunk.

Lenders have expressed worry about loans to the power, commercial real estate, construction, aviation, textile and metals sectors, which are among those hardest-hit by slowing economic growth and sluggish policymaking that has deterred investment.

India's industrial output unexpectedly fell in March for the first time in five months, shrinking an annual 3.5% from a year earlier.

The economy grew at 6.1% in the December quarter, its slowest in nearly three years.