Banks are likely to restructure up to ₹8.4 lakh crore of loans, or 7.7% of the overall system’s credit, under the newly announced recast package, a domestic ratings agency said on Wednesday. More than 60% of this ₹8.4 lakh crore was likely to slip into the non-performing assets (NPAs) category if not for the recast move, and the restructuring would help banks’ bottomlines as the funds needed to be set aside, as provisions, would be lower, India Ratings and Research said. Earlier this month, the RBI had announced a recast package which focussed on a case-by-case approach for restructuring rather than a blanket or sectoral approach. The central bank had also allowed small-value, non-corporate loans to be recast. Unlike the earlier experience post the global financial crisis — when about 90% of the restructuring happened in corporate loans — the non-corporate segment, which includes small businesses, agricultural loans and retail lending, will account for a higher share this time, the agency said. It estimated the total amount of non-corporate loans to be recast at ₹2.1 lakh crore. It further said the non-corporate segment was showing signs of stress even before the start of the pandemic, when things seemed to be normalising in the corporate space.
You have reached your limit for free articles this month.
To get full access, please subscribe.
Already have an account ? Sign in
Show Less Plan
Subscription Benefits Include
Find mobile-friendly version of articles from the day’s newspaper in one easy-to-read list.
Move smoothly between articles as our pages load instantly.
Enjoy reading as many articles as you wish without any limitations.
A one-stop-shop for seeing the latest updates, and managing your preferences.
A select list of articles that match your interests and tastes.
We brief you on the latest and most important developments, three times a day.
*Our Digital Subscription plans do not currently include the e-paper ,crossword, iPhone, iPad mobile applications and print. Our plans enhance your reading experience.
A letter from the Editor
Dear subscriber,Thank you!Your support for our journalism is invaluable. It’s a support for truth and fairness in journalism. It has helped us keep apace with events and happenings.The Hindu has always stood for journalism that is in the public interest. At this difficult time, it becomes even more important that we have access to information that has a bearing on our health and well-being, our lives, and livelihoods. As a subscriber, you are not only a beneficiary of our work but also its enabler.We also reiterate here the promise that our team of reporters, copy editors, fact-checkers, designers, and photographers will deliver quality journalism that stays away from vested interest and political propaganda.Suresh Nambath