SBI’s Arundhati Bhattacharya says more clarity needed on debt restructuring norms

SBI’s request on debt restructuring norms comes at a time the when resolution of stressed assets are getting stuck because banks are unwilling to take large losses


State Bank of India chairman Arundhati Bhattacharya. Photo: S. Kumar/Mint
State Bank of India chairman Arundhati Bhattacharya. Photo: S. Kumar/Mint

Mumbai: State Bank of India (SBI) chairman Arundhati Bhattacharya said the bank needs more clarity on restructuring guidelines and an assurance that decisions taken by its officials will not be questioned for successful resolution of stressed assets.

“In certain cases, we need deeper haircuts spread over a few quarters. There are also certain kinds of instruments or conversions; can Sebi extend what they have allowed in SDR (strategic debt restructuring) for these conversions?” Bhattacharya said on the sidelines of an event on Wednesday.

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SBI’s request for a relaxation of norms comes at a time the when resolution of stressed assets are getting stuck because banks are unwilling to take large losses for fear of being questioned for it.

The recent arrest of IDBI Bank officials over the Kingfisher Airlines case has also led to a slowdown in the process of finding a resolution for stressed assets.

Even though the Reserve Bank of India (RBI) has introduced joint lenders’ forum (JLF), 5/25 refinancing, SDR and scheme for sustainable structuring of stressed assets (S4A), bankers have not been able to use them to their advantage. A large pile of stressed assets continue to linger on bank balance sheets and hurt their quarterly earnings.

Bhattacharya, however, believes that having an oversight committee for cases outside SDR will enable lenders to take decisions without fear.

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