Retail Loans Dominated Covid Restructuring For Top Private Banks 

HDFC Bank’s relatively large restructuring, according to Jimmy Tata, chief credit officer at the lender, followed after it opened up the scheme to all who requested it. A lot of it was precautionary, he said.

In the initial days, the bank had put in place a process where the borrower had to demonstrate the need for restructuring and was extended only if there were signs of distress. “But as soon as it (restructuring scheme) got opened up and it was allowed on request, we were much more forthcoming in permitting the restructuring, and that’s pretty much reflected in the fact, that very a large chunk of it is not delinquent at this point in time,” Tata told analysts.

In comparison, Axis Bank refrained from restructuring much.

“…in case of retail slippages that happened because of Covid or what we went through in this last year, we didn’t rely on restructuring or the amount of restructuring which we have done on the retail side is minimal,” Chief Executive Officer Amitabh Chaudhry told analysts after the bank’s earnings. “So, whatever has slipped had to slip because there was no other mechanism which we used to so-call manage our portfolio.”

As of March 31, the bank had restructured retail loans worth Rs 503 crore under the one-time restructuring scheme, out of the total book of Rs 844 crore.

Kotak Mahindra Bank barely restructured any loans with the pool of such debt at Rs 95 crore. “Patchwork will not work and lenders must face the reality,” Uday Kotak, the bank’s chief executive officer, said on a media call when asked about the need for a new restructuring window. “The right approach is to face the reality and take the impact on the chin.”

Smaller peer RBL Bank restructured loans worth Rs 467 crore, which belonged entirely to its retail borrowers. Addressing the press after announcing the quarterly results, Chief Executive Officer Vishwavir Ahuja said losses came from its unsecured retail book.

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