In an indication of the continuing stress for corporate India, lenders have approved recast of 46 cases worth R51,250 crore through the corporate debt restructuring (CDR) mechanism in the first 10 months of FY15, sources told FE.
In January, the number of restructured cases stood at two with a total loan value of R1,040 crore, probably because many of the cases are being decided at the Joint Lenders Forum (JLF).
The largest case that was referred to the cell in January was Pipavav Defence and Offshore Engineering worth R7,600 crore. Meanwhile, bankers have referred 26 cases worth R29,750 crore in April-January period, with two cases worth R7,980 crore referred in January.
Though the pace of referral as well as approvals appeared somewhat muted, lenders said that they expect referrals to pick up this quarter 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 R1.09 lakh crore and had approved 42 cases worth R60,285 crore.
Bankers and CDR cell officials said the 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 February last year, to classify loans on the basis of the number of days interest repayments payments were overdue.
January saw approvals of cases like Tulsyan NEC (R750 crore) and Tara Health Foods (R300 crore).
Meanwhile, loans to companies like Pipavav Defence and Offshore Engineering (R7,600 crore) and Varia Engineering (R380 crore) were referred for recast in January.
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 in the same period last year.
Subsequently, the amount of loans referred in Q2FY15 stood at R13,300 crore compared to R24,859 crore in the comparable quarter previous year. Owing to guidelines by RBI, JLFs were mandated to find a corrective action plan (CAP) for a company which has repayment overdues of more than 60 days.
Earlier, the lead banker in a consortium used to refer accounts to the CDR cell. However, at present, JLF decides on restructuring the account as a CAP and refers the account to CDR cell after a preliminary viability study.