India?s leading 15 banks have restructured loans worth around Rs 40,000-crore in the last fiscal.
Despite recording average profitability where some banks have recorded a higher growth while others have seen their profit nosedived for 2008-09, the Indian banking sector has reset the terms for lending in a huge number of its loan accounts. This move which has been done according to the latest guidelines on restructuring of bank accounts issued by the Reserve Bank of India, has undoubtedly helped the Indian banks to check the formation of bad loans that usually tend to dent their profitability.
The country?s largest lender, State Bank of India (SBI) restructured loans worth Rs 11,000 crore in the concluded fiscal. SBI?s restructuring is almost double than the balance sheet size of the country?s mid-sized private sector bank, Development Credit Bank.
ICCI Bank has restructured accounts worth Rs 1,115 crore whereas HDFC Bank restructured 13 loan accounts amounting to Rs 120 crore in the last financial year. However, Axis Bank restructured accounts worth Rs 996 crore. YES Bank?s restructuring for the last fiscal was worth Rs 29 crore.
Among the other state-owned banks, the lead in re-setting the lending terms for advances was taken by Bank of India. It has restructured the loans worth Rs 4,800 crore spread across 35,000 accounts during fiscal 2008-09.
Indian Overseas Bank too restructured loans worth as high as Rs 4,000 crore spread across 9000 accounts during the same year.
However among the leading banks, huge number of loan accounts were restructured by Union Bank of India. It restructured 1,13,226 accounts accounting for loans worth Rs 2,959 crore in the last fiscal.
IDBI Bank, Bank of Baroda, Allahabad Bank and Canara Bank restructured loans worth Rs 3,131 crore (82 accounts), Rs 2,659 crore (40,423 accounts), Rs 2,560 crore (39,756 accounts) and Rs 2,066 crore (72,184 accounts) respectively in financial year 2008-09.
The other leading state-owned lender that restructured the loans in the reporting period include: Central Bank of India (Rs 1,803 crore across 34,841 accounts), Bank of Maharashtra (Rs 1,102 crore across 7352 accounts), Corporation Bank (Rs 1,043 crore across 4,313 accounts) and Dena Bank (Rs 550 crore across 9,246 accounts).
The second largest state-owned lender, Punjab National Bank (PNB) is yet to announce its financial result for the last financial year.
Vaibhav Agrawal, banking analyst, Angel Broking said, ?By the end of the current financial year, 5-10% loan accounts that have been restructured by the banks in India could turn out to be the non performing assets. It is less likely to cross the 10% mark as interest rates are falling gradually in a scenario when liquidity is adequate in the system, he said.
Vaibhav?s observation indicates that Indian banking sector is likely to take a cummulative hit worth around Rs 10,000 crore in the current fiscal due to non performing loans.