Acceding to request from banks to give more time to accept debt restructuring proposals, the Reserve Bank of India has extended the deadline to commence the process 60 days to March 31, 2009.
The central bank has, however, not extended the deadline for completing the restructuring process. So, banks will have to complete the exercise by June this year.
Banks have received many proposals after RBI gave leeway to banks for restructuring accounts of viabale units facing temperory cash flow problems due to economic slowdown. The prominent sectors from which units have approached banks include small and medium size units involved in exports, textiles, auto components and engineering sector.
Bankers said they continue to get proposals even now as it gives companies breathing time when economic and business climate has only turned worst.
| Top ten NPAs in quarter ended Dec 2008 | |||
| Rs crore | Gross NPA | Net NPA | NPA (%) |
| SBI | 13-Jun | 15-Oct | 1.36 |
| ICICI Bank | 8988.08 | 4400.23 | 2.07 |
| PNB | 3264.35 | 552.31 | 0.39 |
| Canara Bank | 2515.46 | 1654.23 | 1.28 |
| Central Bank | 2288.33 | 945.4 | 1.18 |
| Bank of India | 2212.73 | 698.72 | 0.52 |
| Bank of Baroda | 1921.42 | 472.58 | 0.37 |
| HDFC Bank | 1911.41 | 614.33 | 0.60 |
| Syndicate Bank | 1762.24 | 621.75 | 0.86 |
Banks had conveyed that as a substantial number of accounts are required to be restructured, it will not be possible to take up all such accounts for restructuring by end of January 2009. “Keeping this is perspective, it has been decided to extend the date for above regulatory dispensation to March 31, 2009,” RBI said in a circular issued on Wednesday evening.
All accounts which carried a “standard status” on the banks’ books on September 1, 2008 are eligible to be treated as standard accounts on restructuring accounts provided the restructuring activity began on or before January 31, 2009. The package had to be put in place within 120 days from date of taking up the initiating the process.
Bankers had discussed this issue with RBI last week at the time of third quarter review of monetary policy .
The restructuring is not restricted to just large accounts which are monitored regularly. The large number of small and medium size enterprises are also eligible for this.
In recent months, banks are facing higher delinquency levels.
According to rating agency Moody’s estimates, the Indian banking system may show gross non-performing assets between 3-3.5 per cent by March 2009 and at higher level of 4-5 per cent by March 2010.
The extent of the asset quality deterioration will be lower in the current credit cycle compared with that seen in the last negative credit cycle (FY1999-FY2001).
It said that companies and banks follow better risk-management system, and the proportion of stressed loans is also lower.
Also read:
Feb 5: Banks seek more time for debt restructuring
https://www.business-standard.com/348011/
