The Telegraph
Friday , August 31 , 2012
Since 1st March, 1999
CIMA Gallary

Crisil sees spurt in debt rejig

Mumbai, Aug. 30: Crisil today forecast that restructured loans of domestic lenders would rise to Rs 3.25 trillion this fiscal against its previous estimate of Rs 2 trillion.

While higher funding challenges faced by companies with large debt will contribute to the rise in restructured assets, the majority of the rejig will be in loans to state power utilities (SPUs) and construction and infrastructure sectors, the rating agency said.

Restructured loans in 2011-12 and the first quarter of this fiscal stood at Rs 1.6 trillion. Banks have also seen some of these restructured loans turning bad.

“In recent months, the availability of unsecured short-term loans from Indian banks has diminished. This is exacerbating refinancing and liquidity pressure, especially for the SPUs. This will lead to a significant increase in the restructuring of SPU loans,” said Pawan Agrawal, senior director with Crisil Ratings.

So far, power utilities alone have contributed Rs 60,000 crore to the restructuring and this is forecast to rise to Rs 1.5 trillion.

According to Agrawal, most of the power loans are likely to be restructured through a centralised scheme co-ordinated by the government.

Difficulty in raising equity in a timely manner is straining the balance sheets and financial flexibility of developers in the infrastructure and construction sectors, resulting in increased restructuring, Agrawal said.