Mumbai, Nov. 8: Banks are worried over the emergence of non-performing assets in their restructured loan portfolios.

Though the slippages are not significant, bankers fear they may rise as the economic slowdown has not ebbed yet. The problem is more acute among PSU banks.

Already, a rise in overall bad assets in the second quarter has dampened the mood among banks, who otherwise, have reported encouraging results.

Under the restructuring scheme, banks have either rescheduled the repayment period or changed interest rates to help borrowers overcome the difficult economic conditions. This facility was allowed by the Reserve Bank of India last year as a one-time measure. The central bank also permitted the banks to classify these restructured accounts as standard assets.

As on September 30, the proportion of such restructured accounts to a bank’s total loan book varied from a low of 0.26 per cent, in the case of HDFC Bank, to as high as 6 per cent for Punjab National Bank (PNB).

The large restructured account of PNB, the country’s second largest PSU bank, is a cause for concern.

An analyst, who did not wish to be identified, said around 2 per cent of the total restructured assets of PNB had already been classified as NPAs. “The bank (PNB) undertook additional restructuring of Rs 850 crore in the second quarter of 2009-10. The total restructured book of Rs 9,800 crore is one of the highest in our coverage universe. We estimate that around a third of this book can turn delinquent over the next six quarters,” Mudit Painuly, banking analyst at Macquarie, said in a recent report.

PNB, like its peers, has also been focussing on the retail segment and reported good growth in advances during the first half of this year. However, high SME lending can impact its asset quality as the sector is more affected by the slowdown.

Other nationalised banks that have high restructured accounts in absolute terms include the State Bank of India at Rs 21,792 crore, IDBI Bank (Rs 9,000 crore), the Bank of India (Rs 8,538 crore) and Union Bank of India (Rs 4,580 crore). In the private sector, restructured loans of ICICI Bank and Axis Bank stand at Rs 4,857 crore and Rs 2,363 crore, respectively.

The SBI restructured loans worth Rs 2,832 crore in the second quarter. However, around Rs 285 crore, or 1.70 per cent of the total restructured assets, have become non-performing.

Mumbai-based Bank of India saw a huge spurt in gross non-performing assets because of rising defaults on its restructured loans. Senior officials of the bank said loan slippage in the second quarter was around Rs 1,400 crore and of this, around Rs 724 crore came from restructured accounts. The bank also forecast an additional slippage of Rs 1,000 crore by the end of this fiscal.

According to industry experts, though small and medium enterprises comprise a substantial part of the restructured assets, big companies also account for a large chunk in terms of value.

Pawan Agrawal, director of Crisil Ratings, said sectors such as real estate or export might find it difficult to meet the revised timeline for repayment fixed under the restructured scheme.

Agrawal, however, says rising NPAs is a not a major risk because of sound capital levels of banks.

“The capitalisation level of the banking system is healthy. For the year ended March 31, 2009, the Tier-I capital adequacy ratio for banks was 9 per cent and the overall capital adequacy ratio was over 13 per cent.’’