Only a dozen large cos seek Covid loan recast – Times of India

Only a dozen large cos seek Covid loan recast - Times of India

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MUMBAI: Around a dozen large borrowers have applied for the RBI’s loan restructuring scheme for those affected by Covid stress. The deadline for corporates and individuals to make an application under the RBI’s resolution framework for Covid-related stress ended on December 31. For small businesses, there is a separate restructuring scheme that will be valid until March 2021.
The Future Group, Shapoorji Pallonji Group and SpiceJet are among those who will apply for loan restructuring. Besides these, there are a couple of thermal power generating companies, a couple of toll road projects, and companies in the textile sector. Bankers estimate that the overall loans that will come up for restructuring would be within Rs 2.5 lakh crore.
Some bankers had expected that the scheme might be extended for individual customers as many borrowers do not know the impact of being classified as a non-performing asset (NPA). However, the RBI had made it clear in a meeting with bank chiefs last week that there would not be any extension and lenders should set aside money from profits for possible defaults.
“The situation appears to be much better than what was thought earlier this year,” said Rajkiran Rai, chairman of the Indian Banks’ Association and MD & CEO of Union Bank. He added that for his bank the earlier projection of 2-3% of loans coming up for restructuring stands. According to banks, large companies in some of the sectors that were most severely affected by the crisis, like hospitality, had deleveraged and were not much of a concern despite their losses.
Although the RBI has not extended the standstill for lenders’ action against borrowers, there continues to be a SC stay in operation that prevents lenders from classifying borrowers affected by Covid as NPAs. This means that even on January 1, banks will not classify those who are behind on repayments only in FY21 as defaulters. The government has also notified a suspension of provisions of the Insolvency and Bankruptcy Code for one year up to March 2021.

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