Could you give us a breakup on the restructured portfolio What
is your restructuring pipeline like
This quarter, we have restructured loans worth R1,146 crore, mostly in the textiles, iron and steel and infrastructure and trade segments. The rate of slippages from restructured assets to NPAs on average is about 16%. Corporate debt restructuring (CDR) during the quarter has been about R298 crore and we estimate our total restructuring pipeline to be around R1,500 crore. Most of the loans in the CDR cell will be restructured within this quarter itself.
Many companies are looking at a second round of restructuring. Will NPAs go up
Companies are sick because of factors external to the industry. So, a second restructuring is not a bad idea. After all, closing down a unit is not of help. NPAs are a small consequence of our norms and provisions for asset classification. The larger picture is that the project must be viable and whatever factors that are coming in the way must be addressed. Unless projects are successful, the overall economy will not improve.
Considering the policy rate hike, what is your stand on interest rates
Our immediate action would be to increase rates, provided it increases our cost of funds. We are not a borrower in the market, so the repo rate doesnt impact us really. We will wait and watch to see if we need to up rates on advances.
Your corporate loan book has risen more than 20%. Where is the demand coming from
Corporate demand has come broadly from non-banking finance companies (NBFCs) and it must have come from construction to some extent, refinancing proposals and from working capital proposals. Basically in refinancing, it has come from commercial real estate, given the interest rate arbitrage during construction, which is usually high.
Once the structure is completed and leased out, the implementation risk is over and the loan refinanced. These proposals come from another bank. This, we encourage only in commercial real estate.