Banks may restructure Rs 8.4 tn loans as economy sputters: India Ratings

A high proportion of the debt from the real estate, airlines, hotels and other consumer discretionary sectors is likely to be restructured

Indian banks may restructure loans worth Rs 8.4 trillion--about 7.7 per cent of total credit in March 2020--to manage financial stress caused by the coronavirus pandemic. The loans cover corporate and non-corporates accounts that banks may recast under the Reserve Bank of India’s recent norms, according to India Ratings.

Almost 60 per cent of Rs 8.4 trillion credit is already susceptible to slip into non-performing asset (NPA) category after lockdowns to contain the coronavirus devastated the economy, in absence of restructuring.

The total amount recast could be higher if restructuring in non-corporate segments exceeds 1.9 per cent of the total