Now companies are not restructuring loans for fear of deteriorating ratings

Banks have implemented a policy to provide loan relief to companies affected by the Corona epidemic on the instructions of RBI, but very few companies want to take advantage of this facility. The reason is that restructuring of debt can negatively impact the ratings of large companies.

PNB, the country's second-largest bank, has said that it has so far received applications from only 15 companies, with a debt restructuring of Rs 2,000 crore. On the current picture of restructuring, PNB MD SS Mallikarjun Rao said, "We had estimated that restructuring of debt of Rs 40,000 crore would be done, but now it seems that it will be half of the estimate." Under the restructuring process, loan customers are renewed by banks.

They offer a chance to repay the debt. Under this, the loan repayment period is extended and sometimes the outstanding interest is also waived. RBI has made a provision for banks to give two years to companies affected by Kovid. PNB MD says, 'Companies say that once restructuring is done, their ratings will have an impact of up to two years as rating agencies do not give ratings as long as the loan restructuring period is in place.