Banks Seek Nod for ‘Special’ Loan Recast
Mumbai: Bankers, led by State Bank of India (SBI), have asked for a special dispensation from the banking regulator to revive companies that require deep loan restructuring.
SBI chief Arundhati Bhattacharya said bankers have sought the Reserve Bank of India’s approval to amortise losses that require deep loan restructuring. Such restructuring involves haircuts, longer duration loans and reduction in interest rates and converting a substantial portion of loan into equity. Bankers said they would be more willing to recast a loan if they have the flexibility to provide for losses across several quarters rather than doing it in one shot.
Bhattacharya was speaking to media after inaugurating “Korea Desk” at SBI’s Mumbai office in collaboration with the Korea Development Bank.
She said banks have proposed to the regulator that the ‘oversight committee’ could player a bigger role in resolving bad loans. At present, the oversight committee oversees whether banks have followed all the norms on loans that are restructured under S4A –– Scheme for Sustainable Structuring of Stressed Assets.