| Banks seek six more months for recast of consortium loans | |
| BS Reporter / Mumbai July 8, 2009, 0:14 IST | |
Commercial banks have sought six more months for restructuring cases (big accounts) with credit lines from a consortium of banks.
 In December 2008, the Reserve Bank of India (RBI) had allowed a one-time benefit to banks, under which such loans were to be taken up for restructuring before March 31, 2009. These loans were to be treated as ‘standard’ account in bank books. This was done to provide support to units which were viable but facing temporary cash-flow problems. The restructuring had to be done by June 30, 2009.
In a pre-monetary policy review meeting with RBI Governor D Subbarao today, commercial banks have requested the central bank to extend the deadline for restructuring such loans by six months up to December 31, 2009.
Speaking to mediapersons after the meeting, State Bank of India Chairman O P Bhatt said both banks and businesses wanted more time for recasting of loans, particularly in cases involving borrowers with credit relationships with a consortium of banks.
Another senior banker present at the meeting said while most small and medium enterprises preferred dealing with one bank, big units often went for lines of credit from more than one lender. The process to restructure such consortium accounts was time consuming, he added.
Another public sector banker associated with the debt revamp process said, “The international economic environment remains in a flux and there are no clear signs of recovery in developed markets. Most of big companies (restructuring cases) have been hit by the financial crisis. It would be beneficial for the health of such accounts to have a systematic restructuring plan.”
The country’s largest lender State Bank of India has restructured loans worth Rs 21,000 crore.
Bankers also raised the issue of treatment of infrastructure projects which were facing a delay in implementation.
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