Under RBI’s restructuring norms, SBI may reorganise 5% of its Rs 23.85 lakh crore loan book

By Ankur Mishra

State Bank of India (SBI), the country’s largest lender, expects 5% of its outstanding loans to come up for restructuring, FE has learnt, even when 72% of corporate loans in the system are under stress. “In our assessment around 5% of the total loan book may come up for restructuring,” a source said. SBI’s total advances stood at Rs 23.85 lakh crore as in June, of which domestic advances remained at Rs 20.41 lakh crore. SBI’s corporate book and retail personal loan account for 39.65% and 36.69%, respectively, of the total domestic advances. The Reserve Bank of India (RBI) had allowed restructuring of personal and corporate loans with strict riders.

Though the larger lenders, with access to capital, are better prepared to combat this crisis, analysts have varying estimates of the quantum of loans that could come up for recast. ICICI Direct had earlier estimated that restructuring of loans in the range of `5.5 lakh crore to `7.4 lakh crore cannot be ruled out after RBI released its circular. “Banking sector has total `37-lakh crore exposure to the troubled sectors. Restructuring of around 15-20% range from these may not be ruled out, with public sector banks taking a larger share,” the company said. SBI, on its part, is more confident as its exposure to the highly stressed sectors is limited. Of its total book, corporate loans account for 39.65% while retail loan accounts for 36.69%. Agri accounts for 10.01% and SME loans for another 13.65% of total loans.

As of June 30, SBI had a total exposure of Rs 9,548 crore to the tourism and hotel industry and Rs 6,933 crore to aviation and airports sector. The RBI circular had mentioned that accounts which did not have dues for more than 30 days as on March 1, would be eligible for restructuring. “We have to only look at standard accounts and fortunately we don’t have much exposure in troubled sectors like hospitality, aviation etc. So, we are not expecting a large number of requests for restructuring,” said a senior official at SBI.

Speaking at the ‘Unlock BFSI 2.0’, an event organised by a financial daily, SBI chairman Rajnish Kumar said he expected lesser number of requests for one-time restructuring of loans from corporates. He also said there would be some requests for restructuring from the personal loan segment and the bank was readying itself to deal with the volumes as far as the personal loan segment is concerned. In an interview with CNBC TV 18, Saloni Narayanan, deputy MD and COO, SBI said, “Around 90 lakh retail customers were under moratorium and the amount was roughly Rs 6.5 lakh crore. However, many customers still chose to pay up. In our assessment 9% of `6.5 lakh crore may further ask for moratorium.”

The public sector lender had earlier declared that 9.5% of the total loan book was under moratorium in the phase two of the repayment break. This was a steep decline from 21.8% of the banks’ customers opting for moratorium in phase one. The banking regulator had allowed lenders to grant moratorium relief to borrowers for three months from March 1, in the first phase. The regulator extended the moratorium period by three months till August in the second phase.

Rating agency Crisil had estimated retail NPAs for banks to go up after August. However, the stress would have been higher in the absence of RBI’s restructuring permission.

In a note to its clients, Nomura said banks would be a lot more prudent towards restructuring in this cycle compared to past cycles, where ultimate slippages/write offs were as high as 70-75% in the corporate segment.

The central bank on Monday specified five key ratios across 26 sectors, which lenders must follow while restructuring of corporate accounts impacted by Covid-19. In its assessment of key ratios, Nomura said 30-50% of the companies across most sectors did not meet the necessary criteria on backward-looking data.