RBI has withdrawn all regulatory forbearances and joint lender’s forum (JLF) for loan restructuring with immediate effect. All loan defaults with exposures aggregating Rs50mn or above would be brought under the “Resolution Plan (RP)” framework.
Further, from February 23, 2018, banks must immediately identify the defaults and make disclosures every Friday to the RBI credit registry.
RPs involving loan restructuring with exposures above Rs1bn require an external rating (two ratings for exposures above Rs5bn). Loans would be deemed NPA if the borrower is in default for 90 days or more during the pendency of RP or on restructuring.
For loan exposures of Rs20bn or above, RP should be implemented within 180 days from the reference date. The reference date is March 1, 2018, or date of default whichever is later. RBI has stipulated timeline of 15 days for referring loan exposures aggregating Rs20bn or above to insolvency proceedings (IP) if lenders fail to implement RP or a borrower defaults when under RP.
(Rs in Cr)
| Banks | Gross NPA | Net NPA | GNPA % | NNPA % |
| State Bank Of India | 199,141.34 | 102,370.12 | 10.35 | 5.61 |
| Bank Of India | 64,248.58 | 36,117.23 | 16.93 | 10.29 |
| Punjab National Bank | 57,519.41 | 34,075.65 | 12.11 | 7.55 |
| IDBI Bank Ltd. | 50,621.75 | 29,352.53 | 24.72 | 16.02 |
| Bank Of Baroda | 48,480.44 | 19,852.15 | 11.31 | 4.97 |
| ICICI Bank Ltd. | 46,038.70 | 23,810.25 | 7.82 | 4.20 |
| Union Bank Of India | 40,988.35 | 20,428.21 | 13.03 | 6.96 |
| Axis Bank Ltd. | 25,000.51 | 11,769.49 | 5.28 | 2.56 |
The new framework is likely to crystallize losses of some borrowers who have not been subjected to restructuring but are under stress. Banks might be required to set aside large sums as additional provisions in FY19. Loans that have been subjected to loan restructuring already face the risk of becoming NPA in FY19. Historically, banks have used various forbearances immediately following a loan restructuring.
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