Loan recasts by CDR cell up 105%

In FY13 so far, 117 loans of R61,195 cr up for recast against 87 cases of R67,088 cr in FY12

Loans worth a staggering R64,818 crore have been recast by the corporate debt restructuring (CDR) cell between April and February, a 105% jump over the previous year, which witnessed a figure of R31,601 crore.

In 11 months to February, 117 loans worth R61,195 crore were sought to be recast compared with 87 cases worth R67,088 crore that were referred in 2011-12. Among large corporate whose loans were recently recast are Hotel Leela, Bharti Shipyard, GTL, Suzlon and HCC.

A banker close to the development said Tulip Telecom?s R1,800-crore debt referred to CDR cell is likely to receive the requisite mandate from the lenders by the end of March. The approval of a CDR package requires the mandate of at least 75% of the creditors by value and 60% creditors by number. ICICI Bank is the lead banker for the loan.

In February, the cell recast loans worth R1,921 crore. This includes R1,200 crore account of Vandana Vidhyut and R385 crore account of Global Coke.

CDR cell in February admitted five cases of R1,604 crore. Some of the companies that sought restructuring include SE Forge at R360 crore, Arshiya Industrial and Distribution Hub at R400 crore and SV Power at R150 crore.

The Reserve Bank of India (RBI) on January 31 had issued revised draft norms based on the recommendations of the committee led by executive director B Mahapatra. The draft norms stipulate the banks to increase the provisioning on existing restructured loans from the current 2.75% to 3.75% by 2013-14 and to 5% by 2014-15. In case of new restructured accounts, the provisioning requirement would rise to 5%, starting April 1, 2013.

The banking system could take a collective hit of an estimated R13,000 to R15,000 crore on its bottomline in next two years if RBI formalises the draft provisioning norms for restructured loans. The banker said with the possibility of the higher 5% provisioning norms on new restructured accounts kicking in from April, the preceding month of March could witness a rise in cases referred to the CDR cell.

Public sector banks which account for about 85% of the loans recast will be the most affected. At the end of the December quarter, Punjab National Bank?s restructured book was 9.6% of loan book, Indian Overseas Bank?s at 10%, Central Bank of India?s at 13.98%, Union Bank of India?s at 5.6%, Syndicate Bank?s at 6.3%, and Bank of India?s at 6.6%. Among the public sector lenders, State Bank of India (SBI) has kept its restructured books at more manageable levels of 3.54% of advances, as of September 30. In case of private sector lenders, the proportion of restructured assets is much lower at 2.4% for Axis Bank, 1.5% for ICICI Bank, and 0.3% for HDFC Bank

According to Crisil, loans restructured by Indian banks will stand at sharply to R3.25 lakh crore in financial year 2012-13. The proportion of restructured loans in this period will be around 5.7% of advances. The majority of restructuring will be in loans to the state power utilities and the construction and infrastructure sectors.

Loan recasts by CDR cell up 105%

Loans worth a staggering R64,818 crore have been recast by the corporate debt restructuring cell between April and February, a 105% jump over the previous year, which witnessed a figure of R31,601 crore.