See reduction in restructured cases in H2FY14: IDBI

RK Bansal, Head-CDR Cell & ED, IDBI Bank says the number of restructured cases for the bank has gone down compared to that of H1FY14.

The restructuring stress is seen in EPC, steel and power business, says Bansal. Out of the three big cases in the month of October, two were from EPC side and hence the amount was much more than Rs 20,000 crore for that month, he adds in an interview to CNBC-TV18. According to Bansal, 15% of corporate debt restructuring (CDR) loans have exited due to failure compared to the earlier 7-10% because the conditions to enter into CDR have become more difficult. Below is the verbatim transcript of his interview on CNBC-TV18 Q: Focusing on you in the capacity of heading the Corporate debt restructuring (CDR) cell, just a couple of questions with regards to that. We would like to know what the level of stress is currently in the system. What is the pipeline of restructuring that we are currently seeing and what are the changes that you have seen from the first half of the fiscal versus now? Is it better or is it worse? A: If I look at only number of cases and compare with the first half, I think it is better. If I see the total cases in August, we received was about 15, in September we got about six and in October and November we have got seven and five case. So, that way number wise in the last three months it has come down. Athough in October there were one or two bigger cases, so amount wise it was quite high. Q: In the month of October those seven cases have amounted to a total value which is much more than Rs 20,000 crore, something that we have not seen. Therefore, will this kind of an incremental stress continue in the banking industry and are we likely to get much larger corporate, something that we saw in the month of October? A: In October the amount was very high, in fact there were three big cases; two were in engineering, procurement and construction (EPC) contractor, other was in coke side and a big case in shipyard and that itself was more than Rs 10,000 crore. Therefore, the total was about Rs 22,000 crore. However, if I look at the cases now which we are receiving in November then the number is certainly much less but corresponding to your earlier question the stress is still there especially in three segment; EPC, steel and power but most of the cases in these three segments, many of them rather have already come to CDR. So, I feel the figure seems to have plateaued and the number will certainly will come down unless economy does so badly that perhaps things cannot improve, but that is not the case. I think it looks like the sign of improvement is there. Q: How are the companies performing once they have entered into CDR, for example is there more successful exiting from the CDR cell or is it because of the fact that business is doing so badly on a fundamental basis that they eventually get converted into NPLs, which one are you seeing more as a trend now as oppose to before? A: During the last one year the percentage of cases which have not performed well and have exited because of failure have gone up. So the percentage, which used to be 7-10 percent, has gone up to 15 percent or so. If we see the total number of cases, we had received application up to November end of 590, out of 590, 99 cases could not be admitted or we rejected them because of many reasons. Therefore, we did not admit 100 cases. After this the cases which have been exited because of failure or because of the success; success figure is somewhat high but the failure figure is also going up. So, that is a concern to all of us but perhaps cannot be helped today. In fact in half year the cases which we have withdrawn on failure were 17 cases in the first half.