Ramky Infrastructure Ltd, an infrastructure development and management company, on Monday said it has approved the debt restructuring programme and lenders will be converting 25% of some term loans into equity.

The company said the debt recast will help in reducing interest rates on some loans.

According to the Reserve Bank of India’s prudential guidelines on restructuring of debt, all loans restructured after 31 March will attract increased provisions, which could make the restructuring of such a large account unattractive to bankers. Currently, restructured assets are classified as standard restructured loans on the bank’s books and attract a 5% provision.

In its filing to BSE, Ramky Infrastructure said its board has reviewed the restructuring scheme under joint lenders forum or JLF and approved the same.

According to the restructuring scheme, interest rate on cash credit (CC), working capital term loan (WCTL), term loans (TL) and short-term loans (STL) have been cut to 11% per annum from 1 October 2014 to 30 September 2016 and 11.25% from 1 October 2016 to 30 SEPTEMBER 2017 and 11.5% from 1 October 2017 onwards, the company said.​​

“The interest moratorium for CC is 18 months and WCTL, TL and STL is 24 months. Lenders will be able to convert 25% of funded interest term loans (FTIL) into equity. Additional funds in the form of priority debt of Rs250 crore," the company said in its filing.

The company will also get additional non-fund facilities of Rs623 crore while promoter will infuse Rs53.96 crore by way of unsecured loan.

The consolidated debt of Ramky Infrastructure stood at Rs3,404.60 crore as on 30 September.

Loans restructured by banks in the last couple of years have come back to haunt them in the form of rising non- performing assets (NPAs), even though bankers and analysts continue to expect asset quality to improve steadily as economic growth revives, Mint reported on 17 February.

The 40 listed Indian commercial banks added Rs.24,024 crore in gross NPAs during the quarter ended December 2014—the second highest since March 2010 after the record Rs.28,363 crore addition during the quarter ended June 2013.

Stressed assets across the Indian banking sector have risen as a consequence of the slowdown in the economy and in part due to poor credit evaluation procedures across some parts of the sector. According to the latest data from the Reserve Bank of India, overall stressed assets, including restructured assets and bad loans, have risen to 10.7% at the end of September compared to 10% in March 2014.

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