The reserve bank of India’s extension of moratorium by another 3 months to August 31 and therefore the chance of companies remaining crippled for months is raising the chance of thousands of crores price bank loans being restructured.
However, the absence of relaxation in restructuring norms might see a considerable rise in provisioning and force banks to boost capital during a tough environment.
Bankers say that the rbi could be got to tweak rules that demand to provision if the existing promoters are preserved when a loan restructuring.
They are saying the existing promoters have the simplest chance of keeping the business going rather than going for a replacement one who would find it tough to run a medium-sized firm.
The necessity for restructuring is acute, particularly in aviation, hospitality, and travel, as they’re viewing an abysm in terms of money, flows with unprecedented uncertainty on the recovery of the bank loans.