Banks and non-bank lenders will restructure up to Rs 10 lakh crore in debt or 8 per cent of outstanding loans under the one-time restructuring scheme announced by the Reserve Bank, domestic rating agency Icra said on Wednesday.
The RBI has operationalised guidelines based on K V Kamath-led panel's recommendations, which give relief to 26 listed sectors affected by the pandemic and stress on banks factoring-in leverage, liquidity and debt serviceability before admitting a case.
"We feel the overall restructured portfolio will come at 5-8 per cent of the overall loans," the agency's head of credit policy Jitin Makkar told reporters on Wednesday.
In value terms, he said the total quantum of the debt which can get restructured will be between Rs 6 lakh crore and Rs 10 lakh crore, specifying that banks have an asset book of Rs 100 lakh crore and another Rs 35 lakh crore is from the non-bank lenders.
He said the estimate on the amount of portfolio to be restructured is based on an assumption that the overall assets under moratorium came down to 20-25 per cent by the close of the six-month relief in August.
A part of the assets enjoying the moratorium are special mention accounts where repayments were due for 31 to 89 days, which cannot be restructured under the new guidelines, he added.
There may be a dip in the non-performing assets (NPAs) levels as a part of the stressed advances get recognized as restructured, the agency said, making it clear that the overall quantum of stressed advances in the system will not decrease.
The agency expects most of the restructuring proposals to adhere to the financial parameters set by the RBI and meet the March 2022 deadline.
The lenders will be immediately adhere on the metric of total outstanding liabilities to adjusted tangible net worth, it said, adding that some sectors, may, however, face challenges on meeting other metrics such as total debt to operating profit, debt service coverage ratio and average debt service coverage ratio.
For sectors like textiles, construction, trading and ferrous metals, the total debt to EBITDA threshold specified by the committee is such that the BB rating hurdle will be difficult to cross, it said.
The agency said it will be using the same methodologies as earlier instances for giving its opinion of a restructuring proposal rating, but sought clarity on some aspects.
It said while the RBI circular mentions that for exposures higher than Rs 100 crore a RP will be essential, it does not specify what should be the minimum RP rating should be for a plan to go through.
The agency said the COVID-19 related disruptions continue to weigh on the credit quality of India Inc and it has taken negative rating actions on 16 per cent of its rated portfolio.
There has been a recent trend of a sequential improvement in the operating metrics in most sectors, as lockdown restrictions have eased, it said, adding that retail, travel and hospitality are experiencing a delayed recovery.
