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Mumbai, November 17

With improvement in economic activities and expectation of recovery in the next fiscal, almost 99% of non-MSME companies are unlikely to opt for the Reserve Bank of India’s one-time debt restructuring, says a report by Crisil Ratings.

The finding is based on a preliminary analysis of 3,523 Crisil-rated non-micro, small and medium enterprises, the report said. In August, the RBI had allowed one-time restructuring for personal loans and for non-MSME corporate borrowers having an aggregate exposure of greater than Rs 25 crore and were affected by Covid-related stress.

“As many as 99% of companies (excluding MSMEs) rated by Crisil are unlikely to opt for the RBI’s one-time-debt-restructuring (OTDR), a preliminary analysis of 3,523 such non-MSME companies indicates,” the report by the rating agency said.

Improving business sentiment to blame

In August, the RBI had allowed one-time restructuring for personal loans and for non-MSME corporate borrowers having an aggregate exposure of over Rs25 crore and were hit by Covid-related stress

As many as 99% of companies (excluding MSMEs) rated by Crisil are unlikely to opt for the RBI’s one-time-debt-restructuring, a preliminary analysis of 3,523 such non-MSME companies indicates, said the Crisil report

Of the sample, only 1% indicated they would apply for a one-time debt recast. This is despite two-thirds of the rated entities being eligible based on the parameters proposed by the KV Kamath Committee set up by the RBI, it said. The rating agency’s senior director Subodh Rai said, “Improving business sentiment on account of increased economic activity over the past couple of months, and expectation of a sharp recovery next fiscal are persuading borrowers to skip OTDR.” Another deterrent is the impact on the borrower’s long-term credit history — accounts of those opting for OTDR would be classified as restructured advances by lenders, which could impact their ability to raise debt in future, he said.

The report said for around 44% of Crisil-rated corporates, more than three-fourths of their debt comprises short-term working capital facilities. — PTI