GOVERNMENT OF INDIA
Ministry Of Finance
Department Of Financial Services
UNSTARRED QUESTION NO. 213
TO BE ANSWERED ON THE 2ND AUGUST, 2011 /11 SHRAVANA, 1933 (SAKA)
Impact of CDR of Private Companies on PSU Banks
213. SHRI RAJEEV CHANDRASEKHAR:
Will the Minister of FINANCE be pleased to state:
(a) Whether the Government is aware that PSU banks are incurring significant write-offs and losses due to Corporate Debt Restructuring (CDR) of private companies that are defaulting on their loans;
(b) If so, the details of the norms for such CDRs and the quantum of CDRs for private companies in the last three years, year-wise; and
(c) The details of impact on the bottom-line of PSU banks as a consequence of such CDRs from write-offs of interest/Ioans?
The Minister of State in the Ministry of Finance
(Shri Nama Narain Meena)
(a) to (c): Corporate Debt Restructuring (CDR) mechanism, under the guidance of the Reserve Bank of India (RBI), is a mechanism useful for the restructuring of debts of corporates by Banks / Institutions. Corporates, whose long term viability is established, but face temporary problems, are extended restructuring packages under CDR by Lenders. In such an event, Banks /Institutions are required to make provision (not write offs) as per RBI guidelines in respect of such restructured debts. Such provisions are also reversed whenever such corporate accounts turn standard assets and become regular in the payment of interest/repayments of instalments etc. to lenders. Write-offs / losses occur in respect of loss assets which are not eligible for restructuring under CDR. Most significantly, the temporary sacrifices, extended by Banks/Institutions are subject to recovery as per the recompense policy guidelines of CDR.