1. No recast by CDR cell in Feb on lack of consensus

No recast by CDR cell in Feb on lack of consensus

Though the pace of referral and approval appeared muted, lenders said they expected referrals to pick up in March as banks would not be able to classify restructured assets as standard from FY16

By: | Mumbai | Published: March 17, 2015 12:21 AM

The corporate debt restructuring (CDR) cell did not approve any loan recast in February, deferring its decision to March due to lack of consensus among lenders, sources told FE. However, bankers referred four cases worth R7,000 crore for restructuring in February.

In the first 11 months of FY15, lenders approved recast of 46 cases worth R51,250 crore through the CDR mechanism, sources said. The largest case that was referred to the cell in February was Adhunik Metalik’s (worth R3,500 crore).

Though the pace of referral as well as approvals appeared somewhat muted, lenders said they expected referrals to pick up in March this year as banks would not be able to classify restructured assets as standard from FY16. In the nine months to December 2013, the cell had received recast requests for 84 cases amounting to R1.09 lakh crore and had approved 42 cases worth R60,285 crore.

Bankers and CDR cell officials said that the fall in referrals was a result of the RBI guidelines on early detection of stressed assets where it had directed banks, in February last year, to classify loans on the basis of the number of days interest repayments payments were overdue.

CDR-cases

The number of cases referred to the CDR cell had fallen since the June quarter (April-June FY15) with only two cases referred as against 28 in the same period last year. Subsequently, the amount of loans referred in Q3FY15 stood at R5,750 crore compared with R45,286 crore in the comparable quarter previous year. As per RBI guidelines, joint lenders’ forums (JLFs) were mandated to find a corrective action plan (CAP) for the company that had repayment overdues of more than 60 days. Earlier, the lead banker in a consortium used to refer accounts to the CDR cell. However, at present, JLF decides on restructuring the account as a CAP and refers the account to CDR cell after a preliminary viability study.

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