New Delhi Rating agency Crisil today said banks are likely to restructure loans worth Rs 2 lakh crore at the end of the current fiscal as pressure on corporate profitability continues. ” The total amount of loans that are likely to be restructure
d by banks over 2011- 12 and 2012- 13 is estimated at nearly Rs 2 trillion,” Crisil said in a report. A sizeable proportion of the restructuring comprises large- ticket corporate exposures.
Total restructured loans will account for 3.5 per cent of the total advances as on March 2013, it said. The large quantum of restructuring reflects the prevailing stress on corporate Indias credit quality because of lower profitability, weak demand and tight liquidity, it said.
The sectors with large debt are particularly vulnerable to restructuring, it said, adding nearly 30 per cent of the restructuring is expected in the power sector.
The other susceptible sectors include aviation, construction, engineering, steel, textiles and telecom infrastructure, it said.
Loans of Rs 75,000 crore were either restructured or their restructuring was underway during nine months ended December 2011, it added. Crisil expects the pressure on banksalt39 asset quality to continue in 2012- 13, as indicated by the increased loan restructuring and non- performing assets ( NPAs) in the sector. Furthermore, it said, banksalt39 gross NPAs ( non- performing assets) are set to increase to 3.2 per cent by March 2013, from 2.9 per cent as on December 2011. The nature of current restructuring is qualitatively different from that in 2008- 09 and 2009- 10. The loans restructured earlier were smaller and represented small and medium enterprise ( SME) accounts, Crisil said. In the current phase, it said, the loans being restructured are large corporate exposures, and over two- thirds of the loans restructured till December 2011 had ticket size of over Rs 1,000 crore, reflecting a high level of concentration.
Such large quantum of restructuring will help restrict the increase in banksalt39 reported NPAs. The gross NPAs are expected to marginally increase to 3.2 per cent as on March 2013 from 2.9 per cent as on December 2011, it said.
The increase in NPAs reflects the expectation of slippages in the agriculture and SME portfolios, it added.
— PTI
