The restructured portfolio of country's banks will touch Rs 3.25 trillion (Rs 3.25 lakh crore), or around 5.7% of banks' advances by the end of the fiscal, credit rating agency Crisil said today.
The agency, which in April had estimated the loan restructuring to touch Rs 2 trillion by March 2013, said loans to the state power utilities (SPUs) and the construction and infrastructure sectors will contribute majorly to the rise.
The agency's senior director Pawan Agrawal said the SPUs will alone contribute a half of the restructuring at Rs 1.5 trillion, as they are increasingly finding it difficult to raise unsecured short-term loans from banks in the current situation to refinance debt obligations.
Developers in the infrastructure and construction sectors are facing trouble raising adequate equity in a timely manner, which is straining their balance sheets, he said.
"Around Rs 0.50 trillion of these restructured loans may slip into NPAs," he said adding that chances of loans to SPUs slipping into non performing assets (NPAs) are limited as they will be bailed out by state and central governments.
"Most likely SPU-loan restructuring will happen through a centralised scheme coordinated by the Government of India," the agency's note said.
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Restructuring has been widely discussed in the recent times, with some quarters also criticising it to be an escape route used by banks to hide delinquencies.
Some analysts have also gone public with their fears that with an overall slowdown in the economic growth, the restructuring portfolios can balloon to wreck the financial systems.
Sector regulator RBI has also been very vocal on the front and has also specially convened meetings with banks' brass to discuss the issue.
RBI Deputy Governor K C Chakrabarty had recently said that the process carried out by banks, especially the state-run ones, is biased towards more privileged customers and that "lack of ethics" has resulted in an unprecedented rise in corporate debt restructuring cases.
Crisil, which expects growth to fall sharply to 5.5% for the year, said the slip on the GDP growth will result in the gross NPAs of banks going up to 3.5% by March 2013 from the 3% mark experienced in June 2012.