Indeed, in a first, the restructuring option has been extended to retail borrowers as well, given that many of them may face challenges in servicing debt owing to salary cuts and job losses.
The major beneficiaries will be sub-Rs 500 crore corporate exposures and retail exposures, which were earlier expected to see the highest increase in NPAs in percentage terms. The debt at risk in these segments – or loans at risk of slipping into NPAs this fiscal unless restructured by banks
– is a sizeable Rs trillion.
The study, covering 14,000 companies that constitute over 75 per cent of the overall corporate portfolio of banks, shows that the debt at risk in corporate loan accounts with exposure less than Rs 500 crore is about Rs two trillion.
Further, the retail segment is witnessing significant pressure, given the stress faced by salaried and self-employed borrowers. Home loans, however, would be less at risk as Indians have the psychological attachment to the homes they live in. But while retail borrowers accord priority to repaying home loans, this does not hold for segments such as unsecured loans. The total debt at risk in the retail segment is estimated to be about Rs one trillion, Crisil said.
Krishnan Sitaraman, Senior Director, Crisil Ratings, said in the corporate segment, the situation today is different from the previous asset quality stress cycle that started four years ago. At that time, the NPAs came primarily from bigger accounts. This time, an analysis of the top-100 exposures reveals that following a period of consolidation and deleveraging, these entities are likely to be better-positioned to withstand the current challenges, Crisil added.
Micro, small and medium enterprises (MSMEs), which have been substantially affected by the pandemic-led disruptions, have also got relief. The life of the existing restructuring scheme has been extended by three month, till March 31, 2021.