The country’s largest private lender HDFC Bank had the highest share in restructuring at Rs 17,395 crore, followed by another private lender ICICI Bank at Rs 4,156 crore.
Personal loans have about 80 per cent share in exposures restructured under regulatory package 2.0 by eight banks who have declared results for the second quarter.
The remaining 20 per cent are loans to individuals used for business and credit to MSMEs.
The total recast exposure of these banks under One Time Restructuring (OTR 2.0) was Rs 27,708 crore.
The country’s largest private lender HDFC Bank had the highest share in restructuring at Rs 17,395 crore, followed by another private lender ICICI Bank at Rs 4,156 crore.
Bankers said the restructuring scheme was designed in May 2021 primarily for households and individuals who suffered job losses, pay cuts, and small and micro businesses facing abrupt halt in cash flows.
So, the share of loans to individuals is high in the total restructured pool.
The amounts for SMEs are smaller, possibly since avenues of support such as emergency credit facilities are available to them.
Rating agency Icra in a note said regulatory measures such as the moratorium and Emergency Credit Line Guarantee Scheme (ECLGS) loans did provide relief to borrowers and reduced the need for restructuring.
Despite these, Covid impacted the cash flow of borrowers.
The overdue loan book for lenders in the retail and micro, small and medium enterprise segments remains high.
In contrast, the overdue loans in the corporate segment have remained stable or declined.
Suresh Khatanhar, deputy managing director, IDBI Bank, said one-time restructuring was not done across the board and prospects of slippage from this pool are low due to careful assessment during finalising the recast.
“Besides, turnaround in the economy will also improve prospects of earnings,” he said.
“Borrowers impacted by Covid who could bounce back were chosen as they needed a breather.
“We don’t see much challenge here,” he said.
Also, there is an uptick in the economy: cash flows have started and visibility of revenues is in place.
“This should encourage them to pay.
“Besides, there is a fear of non-payment, making them CIBIL defaulter,” bankers added.
ICRA said the impact of the second wave was relatively well contained compared to 30-40 per cent of the book being under moratorium in the first wave.
The overall restructuring is estimated at Rs 2 trillion till the end of June 2021.
The headline asset quality will continue to improve, though contingent upon the performance of overdue and restructured loans.
The restructuring numbers are much lower than initial estimates of five-six per cent which was solely due to the first wave, ICRA said.
Photograph: Ajay Verma/Reuters
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