Recast referrals down to 2 in Nov

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Updated: December 13, 2014 1:20:38 AM

Lenders referred two cases worth Rs 570 crore to the corporate debt...

Lenders referred two cases worth Rs 570 crore to the corporate debt restructuring (CDR) cell in November, sources told FE. This takes the total cases referred to the cell in the first eight months of FY15 to 20 with a debt of Rs 18,690 crore.

During April-November 2014, lenders have approved recast of Rs 40,850 crore of loans, with approvals of Rs 800 crore in November alone.
Though the pace of referral — as well as approvals — appeared somewhat muted, bankers said they expected referrals to pick up in Q4FY15 as banks would not be able to classify restructured assets as standard from FY16. In the nine months to December 2013, the cell had received recast requests for 84 cases amounting to Rs 1.09 lakh crore and approved 42 cases of Rs 60,285 crore.

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Bankers and CDR cell officials said that the fall in referrals was a result of the 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.

November saw approvals of cases like Gurgaon-based Hythro Power Corporation (Rs 400 crore), Shree Parasnath Re-rolling Mills (Rs 180 crore) and Venus Remedies (Rs 270 crore).

Meanwhile, loans to companies like Tara Health Foods (Rs 300 crore) and Venus Remedies (Rs 270 crore) were referred for recast in November.

The number of cases referred to the CDR cell had fallen since the June quarter (April-June FY15) with only two cases referred against 28 referred in the same period last year. Subsequently, the amount of loans referred in Q2FY15 stood at Rs 13,300 crore compared to Rs 24,859 crore in the comparable quarter of the previous year.

Following the RBI guidelines, joint lender forums were formed to find a corrective action plan (CAP) for the debt-ridden company. Earlier, the lead banker in a consortium used to refer accounts to the CDR cell. Now, the JLF decides on restructuring the account as a CAP and refers the account to CDR cell after preliminary viability study. Moreover, some loans at present are also being restructured by JLFs instead of being referred to the CDR.

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