One-fifth of CDR cos queue up again
As many as 15-20% of the new cases being referred to CDR cell are cases that are seeking a second admission into the CDR cell, said a banker close to the cell. A second round of restructuring generally occurs when the first round of restructuring fails to help the company tide through its debt woes. It, therefore, requires further moratorium and debt infusion to revive the business.
If one was to include CDR cases that have been previously restructured bilaterally between banks and corporates (outside the CDR cell), this would take the tally of cases seeking second restructuring to much higher levels. A recent note from brokerage firm Prabhudas Liladhar, which emerged after a meeting with the CDR cell, states that a large proportion (over 50%) of the incremental cases being referred now are second restructuring cases.
In the case of bilateral restructuring banks act on their own behest and restructure only their portion of the debt. The CDR cell on the other hand is a forum where lenders jointly seek to restructure the ailing account.
A senior bank official from a public sector bank said that there is a rising trend of companies seeking a second round of restructuring through the CDR cell. "It enables us to keep the loan as a standard account in our books. However a second round of restructuring is undertaken only when the business remains viable,” the public sector banker
Be the first to comment.