Loan recast by the corporate debt restructuring (CDR) cell fell sharply in May to R804 crore against R5,848-crore cases approved in April. The quantum of loans admitted to the CDR cell also came down with the cell admitting seven cases worth R2,517 crore in the month against R4,747-crore loans admitted in April.

In April-June quarter last year, the cell had restructured 17 cases worth R17,957 crore and admitted 41 cases worth R20,528 crore. Only three cases were approved in May, of which the largest was SE Forge worth R490 crore, said a banker on condition of anonymity. The approval of CDR package requires the mandate of at least 75% of the creditors by value and 60% creditors by number.

The seven loans admitted to the cell include Maheshwar Hydel Project worth R730 crore, Le Meridien Hotels worth R579 crore and Chincholi Sugars worth R200 crore.

Bankers meet every month to take a stock of the developments in each company admitted to the CDR cell and whether they should be approved or not.

On May 30, Reserve Bank of India had announced the final guidelines on restructuring of loans, which will make restructuring of accounts more expensive for banks. The guidelines said all new cases of restructuring from June 1 would attract 5% provisions, and in the case of assets already in the restructured portfolio, the provisions would be raised from the current 2.75% to 5% in a phased manner. Banks are required to raise their provisions to 3.5% by March 31, 2014, on the current stock of restructured assets.

According to analysts, the tougher recast norms may result in a hit in the range of 0.2%-13.8% of estimated profit before tax (PBT) of banks, for FY14.

Public sector banks which account for about 85% of the loans recast will be the most affected. At the end of the March quarter, Punjab National Bank?s restructured book was 10% of the loan book, Indian Overseas Bank?s 10%, Central Bank of India?s 13.2%, Union Bank of India?s 5.6%, Syndicate Bank?s 6.3% and Bank of India?s 6.6%.

Among the public sector lenders, State Bank of India (SBI) has kept its restructured books at more manageable levels of 3.45% of advances as of December 31. 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.