Most stressed loans out of recast ambit

MUMBAI: Stressed loans totalling ₹5.7 lakh crore may not be eligible for the proposed one-time debt recast aimed at saving borrowers affected by the coronavirus outbreak, three bankers said. These are so-called special mention accounts (SMAS) where repayments were already late by over 30 days on March 1, Reserve Bank of India’s (RBI’S) cut-off date to be eligible for the new scheme.

While the central bank has allowed a one-time debt recast for SMA-0 accounts—those with payments late up to 30 days— SMA-1 (31-60 days’ delay) and SMA-2 (61-90 days) are not covered.

Since 8.5% of all loans were non-performing at the end of March, total standard loans in India stood at ₹94.9 lakh crore. Of the total standard loans, 6.03%, or ₹5.7 lakh crore, are loans with repayments delayed by 31-90 days and, hence, ineligible for recast under the new norms.

Recasting them wouldn’t be possible without classifying them as non-performing assets.