Kamath Committee shocker: Rs 37.72 lakh cr, or 72% of all bank loans, under stress; 26 sectors to restructure

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Ziraat Times
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New Delhi: Bank loans worth Rs 15.52 lakh crore are under stress due to the major disruptions in businesses amid the Covid pandemic lockdown, according to the KV Kamath Committee.

Tasked with working out loan restructuring guidelines, the committee has said that the banking debt worth Rs 23.71 lakh crore, or 45 per cent of banking sector debt, was already under stress before the coronavirus hit the economy.

With further disruptions, 72 per cent of the banking sector debt worth Rs 37.72 lakh crore has slipped into stress, the committee said.

Sectors such as retail trade, wholesale trade, roads, and textiles are believed to bear the maximum brunt of the pandemic, while NBFCs, power, steel, real estate, and construction sectors were already reeling from stress in the pre-pandemic period. 

Out of Rs 15.5 lakh crore loans that went under stress, Rs 5.42 lakh crore are from retail trade and wholesale trade, and Rs 1.94 lakh crore is from the roads sector.
The committee has now identified 26 sectors to provide sector-specific push, that have been severely affected and it has identified 5 key financial parameters with acceptable range to be eligible for resolution. 

Last week, Finance Minister Nirmala Sitharaman had asked banks and NBFCs to roll out loan restructuring scheme for coronavirus related stress by September 15 and provide adequate support to the borrowers following the lifting of moratorium on repayment of debts. Now, with the new report and recommendations of the Kamath Committee, the banks are expecting a formal go-ahead with formal loan restructuring. 

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