Banks may restructure loans of more than Rs 10 lakh crore largely attributed to 5-6 critical sectors, including aviation, commercial real estate and hospitality, that have been severely hit by the COVID-19 outbreak, according to bankers quoted in a PTI report.
Last week, Finance Minister Nirmala Sitharaman asked banks and NBFCs to roll out one-time loan restructuring scheme for COVID-19 related stress by 15 September.
A top official of a public sector bank told PTI that it is a win-win for both lenders and borrowers as corporates will try to save their business from turning non-performing asset (NPA) and buy crucial time for getting cash flow back for servicing the debt.
Secondly, banks have to make only 10 percent provision against restructured account as compared to 15 percent if the same account turns into NPA, the official said, adding that the lure of 5 percent conservation of capital will also push banks for recast.
Given the benefit, the official said, it is estimated that 12-15 percent of total loan book would avail one-time restructuring.
Micro, small and medium enterprises (MSMEs) are already covered under the ongoing restructuring scheme which was tweaked recently to cover those impacted by COVID-19 crisis. It is to be noted that a total Rs 100 lakh crore worth of loan is outstanding in the banking system.