Banks Seek Nod for ‘Spe­cial’ Loan Re­cast

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

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.

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