Only one-fifth of loans up for recast availed of moratorium, says PNB

Only about one-fifth of the corporate loan restructuring proposals received by Punjab National Bank, the country’s second-largest state-owned bank, availed of the moratorium facility on loan repayments during the Covid-19 pandemic.

“Of the 15 proposals finalised for corporate restructuring, only three were under moratorium,” PNB Managing Director and Chief Executive Officer S S Mallikarjuna Rao told investors in a conference call last week.

The bank has received 15 corporate loan proposals amounting to Rs 2,200 crore for restructuring, four of which are part of a consortium, 11 are of “small amount” and one is a big account (in the retail sector).

So far, PNB has processed restructuring applications worth Rs 41 crore for retail and micro, small and medium enterprises (MSMEs) and has received request for another Rs 30 crore worth of such loans. The bank expects Rs 4,000- 5,000 crore worth of retail and MSME loans to be restructured before December 2020 — when the window for restructuring will shut.

The bank has sharply revised its projections of accounts that may require one-time restructuring under the RBI’s special window announced in August for dealing with Covid-19-related stress. It estimates that borrowers worth Rs 20,000 crore, which accounts for around 3 per cent of its loan book, will require restructuring, from its earlier estimate of Rs 40,000 crore (5 per cent of the book).

Borrowers with repayments worth Rs 28,000-30,000 crore hadn’t paid a single loan instalment from March-September, partly due to the fact that they availed of moratorium.

However, the bank expects recovery in the coming month with businesses resuming operations.

“Of the moratorium extended to loan accounts worth Rs 2.40 trillion, our strict monitoring is restricted to amount up to Rs 48,000 crore.