Corporate loan rejig sees a sharp drop in FY2017
According to the data tabled in the Rajya Sabha on Tuesday, the amount of restructured corporate loans came down to Rs 2,04,884 crore in FY17.
Mumbai: Despite a rise in non-performing assets in the banking system, the amount of corporate loans restructured by the lenders has seen a significant decline during the last financial year.
According to the data tabled by Union finance minister Arun Jaitley in the Rajya Sabha on Tuesday, the amount of restructured corporate loans came down to Rs 2,04,884 crore in FY17. This is when compared to Rs 3.70 lakh crores worth of corporate loan restructuring undertaken in FY15 and Rs 2.99 lakh crore loan restructured in FY16.
Replying to members queries seeking the names of companies whose loans have been restructured, Mr Jaitley said, “Any restructuring is to be carried out in accordance with detailed guidelines issued by RBI on restructuring like Joint Lenders' Forum (JLF), Strategic Debt Restructuring (SDR) and Scheme for Sustainable Structuring of Stressed Assets (S4A)”.
However, the minister refused to divulge the names of those accounts saying that the names and details of borrowers are covered under section 45E of RBI Act, 1934 and banking laws, which oblige financial institutions to maintain secrecy about the affairs of their constituents.
In June 2017, the Reserve Bank of India had initiated process for the speedy resolution of stressed assets by identifying top 12 corporate defaulters accounting for 25 per cent of the systems non-performing loans for immediate resolution under the new Insolvency and Bankruptcy Code.
The internal advisory committee constituted by RBI has recommended all accounts with fund and non-fund based outstanding amount greater than Rs 5,000 crore, with 60 per cent or more classified as non-performing by banks as of March 31, 2016 for resolution under the bankruptcy code.
On the issue restructuring of farm loans that became impaired due to natural calamities, Mr Jaitley said that banks are free to facilitate restructuring including conversion of short-term debt to term loan or rescheduling the repayment time frame for such borrowers.