Asset quality a worry for lenders despite shrinking moratorium book: Icra

Loan restructuring could postpone recognition of stress in the lender book in the near-term, but high share of such assets would be a credit negative, Icra said

Although the moratorium book of lenders has shrunk in Phase-2 (June-August), yet the pressure on asset quality remains very high as borrowers who have continued with moratorium are more vulnerable to default. Rating agency Icra says, while there is debate on whether the moratorium period should be extended beyond August or a one-time restructuring should be granted, both the sops could pose challenges to lenders not only in implementation but also on their financial stability.

According to the rating agency, median loans under moratorium would be around 25-30 per cent compared to a broad band of 10-50 per cent of total