Have not seen ‘clamour’ or ‘rush’ for corporate, retail loan restructuring: SBI Chairman Rajnish Kumar

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September 23, 2020 7:00 AM

Kumar said he does not see a clamour or rush for loan restructuring for some large corporate accounts, which were stressed, as changes in the management are happening and the problems are getting resolved.

For hotels, there are disruptions from cash flow, their term-loans are being rescheduled. And same is true for shopping malls," he said.For hotels, there are disruptions from cash flow, their term-loans are being rescheduled. And same is true for shopping malls, he said.

State Bank of India (SBI) chairman Rajnish Kumar said on Tuesday the bank has not so far seen a ‘clamour’ or ‘rush’ for the restructuring of corporate loans under Reserve Bank of India’s loan restructuring scheme. Kumar said that in the personal loan book also, the lender has not seen a rush from the retail borrowers for loan recast.

“From the banking side, what I am seeing there is not too much demands (for corporate loan restructuring). It may be contrary to what the public discourse is, but as of now the reasons could be many. One is of course a lot of clean up has already happened. In the capital, a lot of deleveraging has also happened. And more than the banks, corporates are reluctant to go for restructuring. That is the feeling I am getting,” Kumar said during the 13th Banking Colloquium organised by the CII.

“So, in such a scenario the need for the restructuring would be more from the lower end of the corporates or the upper end of the MSME,” he pointed out, speaking on the loan recast scheme under Reserve Bank of India’s August 6 circular.

Kumar said he does not see a clamour or rush for loan restructuring for some large corporate accounts, which were stressed, as changes in the management are happening and the problems are getting resolved.

“And, from where would the demands for restructuring come from? We have to understand. Most impacted is the aviation, hospitality and the shopping malls. Real estate in any case has been struggling for the last five years, so the struggle has become a little bit more (due to the pandemic).

For airlines, their debt profile is very different. And their major debt obligations come from the leasing of the aircrafts. For hotels, there are disruptions from cash flow, their term-loans are being rescheduled. And same is true for shopping malls,” he said.

On restructuring of individual loans, which is happening for the first time, the SBI chairman said the bank has not so far seen a rush from the borrowers. “Next quarter would be crucial for the requests coming in… we are almost, almost there for reaching recovery. If there is a recession for a prolonged period, then it would be different matter. And the stress will appear more in FY22 than in FY21. For SBI, the restructuring may not be more than Rs 2 lakh crore,” he added.

“For the Atmanirbhar Abhiyan Package there are a lot expectations and responsibility that lay with the banks,” the SBI chairman said, adding the banks have been performing there responsibility in a very big way.

“The first and foremost is the direct benefit transfer to the people who needed it most. And, all of you are aware that in the three months– April, May and June– there was a transfer to more than ten crore of the beneficiaries by the banking system,” he said.

“Today the banking system has the capability and reach to deliver financial help each and every corner of the country. In this sense a very critical role is being played by the banks. For the MSMEs in particular the help came by the way of emergency credit line…the government support to the MSME sector by way of guaranteed emergency credit line was also delivered very efficiently by the public sector banks and the private sector banks, and sanctioned more than Rs 1.60 lakh crore, which again proves to be a lifeline for the MSME sector,” he added.

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