Requests for rejig of loans worth R3k cr pending with SBI
The bulk of loan restructuring in the April-June quarter could, much like in the March 2012 quarter, be done in public sector banks. Bank officials and industry analysts estimate that many banks including State Bank of India (SBI), Union Bank, Canara Bank, Allahabad Bank and Indian Bank will see sizeable amounts of loans being restructured in the April-June quarter.
In line with the previous quarter, the State Electricity Boards (SEBs) and the Air India loan accounts will form a sizeable portion of restructured accounts in the June quarter. Upendra Kamath, CMD Vijaya Bank, said that the bank will restructure loans worth R2,700 on account of the Haryana and UP SEBs. Canara Bank and Allahabad Bank could see a rise in their restructured loan books of R5,385 crore and R1,157 crore.
Requests for restructuring loans worth close to R3,000 crore are understood to be pending with the country?s largest lender State Bank of India (SBI), according to a report by Edelweiss. In the March, 2012 quarter, SBI recast loans worth R5,100 crore crore including the Air India account but the bank does not have too much of an exposure to SEBs. An ICICI Securities report on Bank of India mentions that the restructured loans as a percentage of gross advances will rise to 8% in Apr-Jun, from 7.1% in the previous quarter. This will be largely on account of the Air India account.
The bank restructured loans worth R3,900 crore in the Jan-March quarter.
Central Bank recast loans worth R7,467 crore in the March 2012 quarter but the management has indicated that the pipeline now looks small. MD Mallya, CMD at Bank of Baroda (BoB) said during the bank?s Jan-March 2012 quarterly earnings conference that a significantly lower amount of restructuring could be on the cards for BoB as most of the larger troubled assets, had been dealt with.
Major private sector banks like ICICI Bank and HDFC Bank have maintained better asset quality and will see fewer cases of restructuring. ICICI bank saw an addition to the restructured loan portfolio of R,200 crore in the Jan-March quarter, but does not expect major worries going ahead. ?Bulk of the restructuring has already been done. Our asset quality outlook is table,?said Chanda Kochhar, MD and CEO of ICICI Bank, during the bank?s Jan-March 2012 quarterly earnings conference.
Union Bank has a relatively low exposure to the aviation sector though it could recast R1,100 crore on account of an SEB. Loans can be restructured either as part of the CDR or bilaterally between the bank and the customer. Banks typically refer a case to the CDR cell when the loan is part of a consortium.
