 "CDR references drop sharply in December")
Did Santa Claus bring good news to bankers who have been burning mid-night oil to restructure debt of stressed companies?
The closing month of calendar year 2013 (December) saw dip activity at the Corporate Debt Restructuring (CDR) cell, with just four cases involving aggregate debt of about Rs 4,500 crore being referred for recast. In the month of November, the CDR forum received just three cases with aggregate debt of Rs 4,000 crore.
Top bankers including those at the CDR cell while showing “signs of relief” are prompt to caution that it is premature to open champagne bottles. There is enough stress in the system due to long-drawn slowdown and burden of interest costs on companies.
"Normally, there is a last minute rush to refer cases at the end of each quarter. But this time around there was no such pressure on us," said a relaxed IDBI Bank executive.
The large cases like ABG Shipyards and Gujarat NRE Coke referred in October swelled the tally. The infrastructure, textiles and iron and steel sector still lead the pack of stressed companies that are under debt recast.
A senior public sector official said many large groups, especially those in roads, power and other infrastructure segments are trying to sell assets and restructure operations. Perhaps this would relieve them from the need to come to banks for recast.
Dun and Bradstreet in its outlook for 2014 said maximum distress in debt was witnessed in the iron & steel sector and infrastructure sector. They have high share in stressed asset book (NPAs plus restructured loans) of public sector banks.
Rating agency Icra has painted a similar picture about the stress levels of banks. In light of large debt recast under CDR, standard restructured advances are slated to grow from 5.3 per cent at end of March 2013 to 6-6.2 per cent by March 2014, it said.
Abizer Diwanji, National Leader - financial services at Ernst & Young India said life will be tough in 2014. Loans given in boom time have showing stress now when the economy is growing at slow pace.
The Reserve Bank of India has proposed more steps tighten rules for restructuring and non performing assets. They will have definite impact on the restructuring activity, he said.
The closing month of calendar year 2013 (December) saw dip activity at the Corporate Debt Restructuring (CDR) cell, with just four cases involving aggregate debt of about Rs 4,500 crore being referred for recast. In the month of November, the CDR forum received just three cases with aggregate debt of Rs 4,000 crore.
Top bankers including those at the CDR cell while showing “signs of relief” are prompt to caution that it is premature to open champagne bottles. There is enough stress in the system due to long-drawn slowdown and burden of interest costs on companies.
"Normally, there is a last minute rush to refer cases at the end of each quarter. But this time around there was no such pressure on us," said a relaxed IDBI Bank executive.
The large cases like ABG Shipyards and Gujarat NRE Coke referred in October swelled the tally. The infrastructure, textiles and iron and steel sector still lead the pack of stressed companies that are under debt recast.
A senior public sector official said many large groups, especially those in roads, power and other infrastructure segments are trying to sell assets and restructure operations. Perhaps this would relieve them from the need to come to banks for recast.
Dun and Bradstreet in its outlook for 2014 said maximum distress in debt was witnessed in the iron & steel sector and infrastructure sector. They have high share in stressed asset book (NPAs plus restructured loans) of public sector banks.
Rating agency Icra has painted a similar picture about the stress levels of banks. In light of large debt recast under CDR, standard restructured advances are slated to grow from 5.3 per cent at end of March 2013 to 6-6.2 per cent by March 2014, it said.
Abizer Diwanji, National Leader - financial services at Ernst & Young India said life will be tough in 2014. Loans given in boom time have showing stress now when the economy is growing at slow pace.
The Reserve Bank of India has proposed more steps tighten rules for restructuring and non performing assets. They will have definite impact on the restructuring activity, he said.