Lenders referred two cases worth Rs 2,100 crore to the corporate debt restructuring...
Lenders referred two cases worth Rs 2,100 crore to the corporate debt restructuring (CDR) cell in October and approved recast of three accounts worth Rs 3,000 crore, said sources.
The two accounts seeking loan recast were Punjab-based Kudos Chemie (Rs 1,900 crore) and Kolkata-based Shree Parasnath Re-rolling Mills (Rs 200 crore). For the first seven months in FY15, lenders have referred loans worth Rs 18,120 crore for recast. “Though their referrals have fallen in last six months, I believe it is going to increase in the January-March period because of the RBI restructuring forbearance deadline,” said RK Bansal, CDR Cell chairman. He added the referrals for the full fiscal are likely to be lower than Rs 1.32 lakh crore worth of accounts referred in FY14.
In October 2014, the cell approved restructuring of three cases worth Rs 3,000 crore. October saw approvals of cases like Surana Corporation (Rs 1,100 crore) and GKC Projects (Rs 1,600 crore). Lenders and CDR cell officials said that fall in referrals was a result of the Reserve Bank of India (RBI) guidelines on early detection of stressed assets where it had directed banks in December last year to classify loans on the basis of the number of days interest payments are due.
The corporate debt restructuring (CDR) cell had approved Rs 40,050 crore of corporate loans in the first seven months of the current fiscal. In the April-September period of FY14, lenders had approved Rs 43,273 crore of restructurings. Bankers are confident that the pace of fresh referrals has definitely slowed down due to early action taken by the joint lenders’ forums and not all stressed accounts are going to CDR. They say the approvals are mostly pending cases from the previous year.
However, analysts say banks are likely to see an increase in referrals to CDR in the next four months as Reserve Bank of India’s (RBI) forbearance on classification of restructured asset would end on March 31, 2015. From FY16, no fresh restructured accounts can be classified as standard. Due to the end of the forbearance, experts also believe banks will see their NPAs rising after the deadline.
According to a recent report by India Ratings and Research, non-performing assets (NPAs) in the banking system are set to increase in the range of Rs 60,000 crore to 1 lakh crore in the next five months.