Amount of credit referred to CDR dips in April-Sept

The amount of problem credit admitted in Corporate Debt Restructuring (CDR) mechanism declined sharply during April-September over the same period last year, reflecting the turnaround in economy and improvement in business climate.

According to CDR data, banks and financial institutions referred 12 cases with loan exposure of Rs 2,469.08 crore in July-September period as against Rs 7,919.53 crore in the second quarter of 2009-10.

The value of loans admitted in April-June was Rs 2,563.71 crore. In the first quarter of 2009-10, 14 cases involving loans worth Rs 7,603.40 crore were admitted by the forum.

Senior public sector bank official said references have declined in tune with the improvement in business environment.

Some of the borderline cases (companies showing initial signs of troubles) which would have landed at CDR, are now able to make repayment on time. This negates need for reference.

While overall improvement in economy is helping business units, it is too early to talk about firm trend of declining reference to CDR. Many ailing airline accounts reeling under debt and having difficulty in paying loans would be restructured outside CDR forum.

Many companies presently under CDR have come forward to prepay loans and exit from mechanism, said IDBI Bank official.