With the Reserve Bank of India?s (RBI?s) new guidelines on the management of stressed assets in place, banks have not been knocking the door of the Corporate Debt Restructuring (CDR) cell. The cell has not received a single new case for a loan recast from member banks so far this fiscal. The guidelines are aimed at helping banks spot trouble early and take speedy action to prevent assets from turning bad.
In FY14, the CDR cell restructured loans worth over R1 lakh crore, the highest in a year. The cell had received recast requests for loans worth R1.32 lakh crore and the companies that sought easier repayment terms ranged from steelmakers to engineering firms and real estate players. In FY13, the cell had approved debt restructuring of cases worth R78,498 crore after it looked at R91,497 crore worth of requests.
Senior bankers say that since accounts are now being monitored closely for weaknesses and are dealt with, there haven?t been cases that need to be taken to the CDR cell for restructuring. The CDR cell in its meetings in April and May had discussed cases that were brought last fiscal. In May, for example, the cell discussed six accounts, but bankers told FE further discussions would be needed before a decision can be taken on any of them. The companies, for which loan recasts are being considered are, among others, Hanung Toys, which is looking to restructure R1,850 crore and Vishwa Infrastructures which wants lenient terms to repay R450 crore. The CDR cell has also looked at the debt profiles of six other companies which are yet to be admitted by the cell. In April, the CDR cell had admitted Tecpro System?s R6,430-crore debt recast case and Hythro Power?s R410-crore case. Meanwhile, the cell deferred its decision on Unity Infrastructure?s R4,300-crore loan obligation.
The RBI guidelines, which were announced in January and came into effect on April 1, require banks to categorise stressed accounts in to three categories depending on the extent of its delay in repayment. Banks are also required to share information on various borrowers with each other.
The norms also require banks to form joint lender forums (JLFs) to discuss an action plan for cases which are in serious trouble of a loan default. Moreover, for cases worth R500 crore, an independent evaluation committee is required to assess the restructuring package, which is under consideration by the CDR cell.