Banks have raised Rs. 8.40 trillion loans will have to be restructured

Mumbai, Ta. 19 August 2020, Wednesday

With the completion of the moratorium at the end of this month, it may be India's turn to restructure a total of Rs 3.50 trillion in loans. At the end of March 2020, the total outstanding loans will be 6.50%.

The Reserve Bank has allowed banks to recoup corporate and non-corporate loans that have come under strain due to Corona. Approximately 30 per cent of loans out of Rs 2.50 trillion were on the verge of sinking into non-performing assets (NPAs) due to lockdowns if restructuring had not been approved.

Due to the decision of the Reserve Bank, banks will be able to maintain a sustainable loan account as standard. Because of this, such loans do not have to be classified as NPAs.

The success of the restructuring of loans will depend on how quickly the economy recovers, a report said. As far as corporate loans are concerned, banks are likely to restructure a total of Rs 2.50 trillion in loans as these loans are in a very precarious position. This amounts to 5% of the total corporate loans. The remaining 5% of loans are moderate risk.

In particular, it will be the turn of companies in the real estate, hotels, airlines, infrastructure sector to restructure loans. On the other hand, the number of non-corporate loans that can go into restructuring is going to be around Rs 2.10 trillion.

Kovid-12 has fallen on every section of the society. The Reserve Bank has also approved the restructuring of retail loans. Fifty per cent of non-corporate loans will be restructured in MSMEs, the report said.

As the condition of the agricultural sector is good, there will be no special need to recoup the loans of this sector. Banks have to provide less amount in case of restructuring as compared to NPAs.