Clear picture on NPAs by Sept: SBI

While movement on restructuring on loans hit by COVID-19 is seen picking up from next week, a clear picture on that front is expected by Sep 30, according to State Bank of India Chairman Rajnish Kumar.

Kumar along with other bankers, speaking at the virtual conference, said the movement of restructuring will play out from Monday, when the six-month moratorium on loan repayment ends. Bankers have been demanding a one-time restructuring to come up with case-specific relief for borrowers hit by COVID-19.

Earlier this month, the Reserve Bank of India allowed restructuring with strict requirements.

RBI Governor Shaktikanta Das, who gave the keynote address at the same event, said while moratorium on loans was a temporary solution in the context of the lockdown, restructuring is expected to give durable relief to borrowers facing COVID-related stress.

According to Kumar, while the bank will consider restructuring requests on a case-to-case basis, it has, so far, not got request from many companies.

He added that most large companies underwent de-leveraging and clean-up exercises and the resolution was dealt by banks under the Jun 7, 2019 framework of the RBI. Even though restructuring of loans is permitted already under the Jun 7 circular for stressed asset resolution, it has to be tagged as a non-performing asset and provided for accordingly.

The non-peforming asset tag makes it difficult for stressed borrowers to avail of any further finance from the system.

Axis Bank MD & CEOAmitabh Chaudhry said his bank will also use pre-COVID regulatory dispensations on dealing with stressed loans. " We will continue to use the pre-COVID dispensations rather than the new dispensation which the RBI has given on how we account for any restructuring it might give," he said. He added that moratorium should not be used as the only barometer of problem because there are other issues around bounce rate, customers conserving cash.