SBI Chief, Mr Rajnish Kumar hopes that the number of debts recasts requests from the corporates will be less. Earlier this month, RBI has provided for a one-time restructuring of both corporate and retail loans affected by the stress associated with COVID-19.
Currently, there has been a lot of deleveraging and resolution for corporations, clean-up has already happened and many accounts have been dealt with under RBI’s existing June 7 framework. As of now, there are not many applications (restructuring) and I hope that there are not many applications.
Speaking at the ‘Unlock BFSI 2.0’ event organized by the Business Standard newspaper, he said there will be some consolidation demands from the personal loan segment and they are prepared to deal with the volumes as regards the P-segment (personal loan segment). The restructuring benefit may be used by those whose account on March 1 was standard, and defaults should not exceed 30 days.
A committee headed by K V Kamath has been formed to provide recommendations on different criteria to be factored into each corporate loan resolution plan. Recommendations from the five-member panel will be out by 6 September. Kumar said banks will look at all restructuring requests on a case-by-case basis and act on whatever regulations permit. He expects to have a good picture of the restructuring sought by the personal category, MSMEs, and companies, by the end of September.
The outgoing managing director of HDFC Bank, Aditya Puri, who was also present at the case, said the moratorium on repayment of term loans was a good decision as cash flow has been affected. He said there might be some upswing in NPAs but it would not be very big after the moratorium was lifted. As far as HDFC Bank is concerned, they ran their algorithm and the provision we made in the last two quarters We want to be conservative and have the boost, so they have made provision.
Speaking at an earlier session at the event, MD and CEO S S Mallikarjuna Rao of Punjab National Bank said his bank is open to restructuring stressed accounts in the aviation, real-estate and hospitality sectors that are hit hardest. Union Bank of India Chief Rajkiran Rai G said that by September-October the real quantity of the stressed restructuring accounts will be in.
Head of IDBI Bank Rakesh Sharma expects 4-5 per cent of the accounts to restructure and, in the worst-case scenario, 6-8 percent may opt for debt recasting.
On Wednesday, the Supreme Court took notice of the alleged inaction of the Centre and asked it to explain its position on the waiver of interest for deferred payments of installments for loans during the moratorium period.
A judge’s bench, Ashok Bhushan, said the Center had not made its stance clear on the issue although it had enough powers under the Disaster Management Act and was “hiding behind the RBI.”
