Banks to restructure loan worth Rs 2 trillion by March 2013: Crisil

 Restructured loan portfolio of banks is expected to touch Rs 2 trillion by March 2013, saidCrisil the rating company. A sizeable proportion of the restructuring comprises large-ticket corporate exposures; total restructured loans will account for 3.5 per cent of the banking sector's total advances as at March 2013,'' it said 

GTL Infrastructure, a telecom tower group; microfinance company BASIX; and Deccan Cargo and Express Logistic, founded by Captain Gopinath, Bharati Shipyard are among companies whose loans have been restructured this year, document from the CDR Cell shows. Other companies like Hotel Leelaventures, HCC and Lavasa await banks approval to be admitted to CDR cell. 

"The nature of restructuring in 2011-12 and 2012-13 is qualitatively different from that in 2008-09 and 2009-10. The loans restructured in 

the earlier phase were smaller and represented the small and medium enterprise (SME) accounts. In the current phase, the loans being restructured are large corporate exposures; over two-thirds of the loans restructured till December 2011 had a ticket size of over Rs1000 crore, reflecting a high level of concentration,'' said Ramraj Pai, president, Crisil Ratings. 

Bank's gross NPAs are set to increase to 3.2% of advances by March 2013, from 2.9% as at December 2011. The large quantum of restructuring reflects the prevailing stress on corporate India's credit quality because of lower profitability, weak demand, and tight liquidity. 

'Nearly 30% of the restructuring is expected in the power sector. The other 

sectors to be impacted include aviation, construction and engineering, steel, textiles, and telecom infrastructure,'' the rating company said. 

Such a large quantum of restructuring will help restrict the increase in banks' reported NPAs - the gross NPAs are expected to marginally increase to 3.2% as at March 2013 from 2.9% at the end of December 2011 said Crisil. The increase in NPAs reflects the expectation of slippages in the agriculture and SME portfolios. The large ticket size of the restructured loans, slippages of even 20%, similar to that witnessed in the past, could lead to further increase in gross NPAs by over 50 basis points over the medium term, the rating company said.


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