29 MAR, 2012, 11.02AM IST, SIMRAN GILL,ET NOW
The country's largest bank, State Bank of India has gone on large scale restructuring drive this quarter. According to sources with direct knowledge of the development, the bank will restructure loans worth Rs 2500-3000 crore in the fourth quarter. This is significantly higher than loans worth Rs 2662 crore that were restructured by SBI in the first nine months of this year.
According to sources, some of the accounts that have been referred for restructuring are Bharti Shipyard, HCC, Hotel Leela Ventures. A few mid-sized accounts, like ARSS Infrastructure Projects, ICSA, Surya Pharmaceuticals and Vijay Electricals have also been put up for the restructuring exercise.
"The high amount of restructuring is a reflection of a tough macro-economic environment. The pain has been broad-based and not confined to any particular sector and SBI is restructuring 8-10 large accounts among numerous other smaller ones," said a source.
While the restructuring is much higher than usual, bank officials believe that most of these accounts can be nursed back to health as a result of the CDR. Going by its past experience, SBI hopes that under 20% of its restructured accounts will slip into the NPA category.
In fact, according to sources, asset quality for SBI could improve substantially this quarter. The bank had posted a record rise in NPAs for the third quarter to Rs 6,000 crore. This quarter, the bank is expected to post NPAs of around Rs 3500 crore.
CDR is a mechanism jointly promoted by banks and other institutional lenders to work out packages for troubled borrowers involving reduction in interest rates, rescheduling of repayment period, part-waiver of principal or interest, and so on.
According to sources, some of the accounts that have been referred for restructuring are Bharti Shipyard, HCC, Hotel Leela Ventures. A few mid-sized accounts, like ARSS Infrastructure Projects, ICSA, Surya Pharmaceuticals and Vijay Electricals have also been put up for the restructuring exercise.
"The high amount of restructuring is a reflection of a tough macro-economic environment. The pain has been broad-based and not confined to any particular sector and SBI is restructuring 8-10 large accounts among numerous other smaller ones," said a source.
While the restructuring is much higher than usual, bank officials believe that most of these accounts can be nursed back to health as a result of the CDR. Going by its past experience, SBI hopes that under 20% of its restructured accounts will slip into the NPA category.
In fact, according to sources, asset quality for SBI could improve substantially this quarter. The bank had posted a record rise in NPAs for the third quarter to Rs 6,000 crore. This quarter, the bank is expected to post NPAs of around Rs 3500 crore.
CDR is a mechanism jointly promoted by banks and other institutional lenders to work out packages for troubled borrowers involving reduction in interest rates, rescheduling of repayment period, part-waiver of principal or interest, and so on.
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