A large number of companies may be left out of the Reserve Bank of India's (RBI's) norms on corporate loan structuring, as bankers expect advances worth only Rs 2-3 lakh crore, or 2-3 per cent of overall bank loans, to be eligible for restructuring.
A five-member committee headed by VK Kamath, constituted by the RBO to look into parameters within which restructuring can be allowed, has submitted it recommendations to the central bank, The Times of India reported.
Bankers said companies that delayed repayments before March 2020 will not qualify, even if they are not classed as non-performing assets (NPAs).
Industry watcher India Ratings (Ind-Ra) had earlier estimated that 7.7 percent or Rs 8.4 lakh crore of bank loans would require restructuring. Of this only 1.9 percent loans are non-corporate. It also said over Rs 5 lakh crore of loans would slip into NPAs without a recast.
The RBI had on August 6 said banks can conduct a one-time restructuring of loans, a move intended to provide borrowers relief during the COVID-19 pandemic.
While bankers say the Insolvency and Bankruptcy Code (IBC) has addressed a large portion of stress in the system, the 30-day clause has excluded borrowers who were struggling even before the pandemic.
As such only real estate, property, hospitality, airlines, consumer and retail sector companies and infrastructure projects that lost on revenue during the lockdown would be entertained, it added.
“Even stressed assets that may not slip in the near term could be restructured as the COVID-19 pandemic would have aggravated stress. Nearly 53 percent of this pool is at a high probability of restructuring/slippages. The balance 47 percent is at moderate risk of restructuring, and the progress on these accounts will depend upon the progress of the COVID-19 situation,” Ind-Ra said.