Over ` 10 L cr loans may come up for restructuring: Bankers

New Delhi, Sept. 6: Banks may restructure loans of more than Rs 10 lakh crore ,largely attributed to five-to-six critical sectors, including aviation, commercial real estate and hospitality, according to bankers.

Finance minister Nirmala Sitharaman last week asked banks and NBFCs to roll out one-time loan restructuring scheme for Covid-19 related stress by September 15.

According to a top official of a public sector bank, it is win-win for both lenders and borrowers.

Explaining the rationale, the banker said, companies 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 per cent provision against restructured account as compared to 15 per cent if the same account turns into NPA, the official said, adding that the lure of 5 per cent conservation of capital will also push banks for recast.

Given the benefit, the official said, it is estimated that 12-15 per cent of total loan book would avail of 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 Covid19 crisis.

A total Rs 100 lakh crore worth of loan is outstanding in the banking system.

Another banking official said nearly half of the 30 per cent of the total loan book which sought moratorium that ended on August 31 may opt for restructuring.

Companies in about halfa-dozen vulnerable sectors —hospitality, aviation, entertainment, commercial real estate and travel & tourism— whose businesses have been impacted severely due to the Covid19 crisis will make a beeline for the scheme.

The K. V. Kamath committee report is expected to give financial parameters like hair cut, debt service coverage ratio, debt-equity ratio post-resolution and interest coverage ratio for recasting corporate loans for over half a dozen vulnerable sectors, the official added.

Last month, Punjab National Bank managing director S. S. Mallikarjuna Rao said about 5-6 per cent of loan book would go for restructuring as per RBI guidelines.