The Reserve Bank of India (RBI) today said non-repayment of loans, restructured for some sectors of the economy due to global financial crisis, are not expected to be significant as the economy is on the path of recovery.
"Slippage in restructured accounts was not expected to be significant, especially in view of the recovery in the economy," the RBI said in its annual report for 2009-10.
Some of the loans given to corporates by banks were restructured under a special dispensation introduced over a limited period to give a boost to industry fighting economic downturn in 2008 and 2009.
However, the RBI said non-repayment of some of these loans could, to some extent, impact the asset quality of banks, which means some of these loans could become NPAs.
The 2009-10 annual inspection process reviewed the manner in which the restructuring guidelines were implemented by the banks to ensure the preconditions and safeguards prescribed in this regard had been complied with, it said.
"It was observed that though there were some deviations, these were not widespread and slippage in restructured accounts was not expected to be significant, especially in view of the recovery in the economy," the central bank said.
As on end-March, the restructured standard advances constituted less than 3 per cent of the total gross advances of the banks.
"While it is expected that the system level delinquency would not rise significantly in future because of the restructuring taken up during the economic downturn, some borrowers could be affected due to adverse exchange rate movements," the apex bank noted.
Banks, therefore, need to carefully assess the risks from unhedged foreign currency exposures of their corporate clients, the banking regulator maintained.
