Relax restructuring norms to enable banks to declare a lower NPA ration!In a recent meeting with RBI governor D Subbarao, CEOs of many large banks urged the regulator to relax the restructuring norms. They pointed out that a number of real estate companies have been complaining about the liquidity crunch and have approached lenders to rollover the loan.
However, there is a resistance among banks to give them an additional line of credit or reschedule their loans on the ground that this will add to their pool of NPAs.
Loan restructuring allows banks not to treat the account as an NPA. Banks often indulge in this exercise whenever they sense that the borrower is in stress and the account may turn into an NPA or bad loan.
It enables them to declare a lower NPA ratio — the percentage of sticky loans to total loans — a dead-weight on their books. Also, once an account is deemed as an NPA, the bank has to make some provisions, which affect its bottomline.
If a real estate company fails to repay loans on a due date, the bank will either accept it as an NPA and restructure the loan or resort to legal action.
Some banks have already come to terms with this and have begun restructuring their real estate loans while a number of banks are looking at ways to reschedule loans to this sector without showing it as NPAs. “A bank has recently asked a builder to somehow arrange for funds on the due date. And, subsequently, it extended an additional line of credit to the company,” said a source. -The Economic Times
Subscribe for free to receive hot Pune real estate news, views and reviews:1) Ravi Karandeekar's Pune Real Estate Market News Blog
2) Ravi Karandeekar's Pune Real Estate Investment Blog
3) Ravi Karandeekar's Pune Real Estate Advertising and Marketing Blog
4) Ravi Karandeekar's Pune Real Estate Blog
5) Please, feel free to call me on my mobile +91 98600 44110! I enjoy talking, sharing my views and giving advice about buying property in Pune real estate market (so i do not charge anything for the first 8 minutes!)
6) Please, join me on Friendfeed, to share news articles, family photos, interesting links and videos and let us discover and discuss information!
Visit Ravi Karandeekar's Pune Real Estate Blog Group and join for free to receive updates of all blogs!
real estate Indian real estate Pune real estate Pune news Pune news Pune real estate news Pune real estate market Pune real estate market news blog Pune real estate blog Pune property blog Pune realty Pune real estate investment Pune real estate marketing upcoming and ongoing real estate projects in Pune current property rates in Pune latest real estate prices Ravi Karandeekar 91 98600 44110 Friendfeed Ravi Karandeekar\'s Pune Real Estate Blog Group Google Groups