Almost Rs 37.72 lakh crore of banking sector debt has been impacted by COVID-19, the KV Kamath led expert committee on restructuring has found. This forms almost 72 percent of the total corporate sector debt of Rs 52.59 lakh crore examined by the committee.
The expert committee was constituted by Reserve Bank of India (RBI) under its August 6 circular on the resolution framework for COVID-19 related stress and was tasked with identifying sector-specific financial parameters that should be factored into assumptions while drafting resolution plans for impacted borrowers.
In its report, the committee found that Rs 15.52 lakh crore of debt, forming 29.4 percent of the total corporate debt, was impacted by the pandemic alone. Another Rs 22.20 lakh crore of impacted debt, forming 42.1 percent of total corporate debt examined, was already facing stress pre-COVID. This would be the most vulnerable segment in need of help.
This Rs 22.02 lakh crore of debt included the NBFC sector with Rs 7.98 lakh crores of debt, power sector with Rs 5.69 lakh crore of debt, steel with Rs 2.66 lakh crore debt, real estate with Rs 2.29 lakh crore of debt, construction with 1.03 lakh crore of debt.
It also included other metals & products with Rs 0.84 lakh crore of debt, auto & ancillary with Rs 0.84 lakh crore, gems & jewellery with Rs 0.56 lakh crore, edible oil with Rs 0.18 lakh crore, aviation with Rs 0.09 lakh crore and shipping sector with Rs 0.05 lakh crore of debt.
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The sectors purely impacted by the pandemic included retail & wholesale trade, roads, textile, engineering, petroleum & coal products, ports, cements, chemicals, tourism/hotels/restaurants, mining, petrochemical, paper, consumer durables, hospitals, airports, building materials, glass and media & entertainment sectors. These formed Rs 15.52 lakh crore of loans.
The expert committee in its report noted, "COVID-19 pandemic has affected the best of companies. These businesses were otherwise viable under pre-COVID scenario."
The report highlighted the pervasive impact across sectors, but said it was with varying severity - mild, moderate and severe. "A segmented approach of bucketing these accounts under mild, moderate and severe stress, may ensure quick turnaround," it said.
The committee has identified parameters to deal with 26 sectors buffeted by COVID-19.
Speaking to CNBC-TV18 today, Kamath said there will be complications in restructuring loans, but he was sure that bankers would take a considered decision to reach an equitable proposal. "I am not second-guessing what clients and banks will do. Banks will have to recast loans in such a way that payments happen," he said.