Few takers for one-time Covid debt restructuring: Crisil

New Delhi, Nov 17 : As many as 99 per cent of companies (excluding MSMEs) rated by Crisil are unlikely to opt for the Reserve Bank of India’s (RBI) one-time-debt-restructuring (OTDR), a preliminary analysis of 3,523 such non-MSME companies by the rating agency has indicated.
The RBI had, on August 6, announced the scheme as a relief measure for non-MSME corporate borrowers having an aggregate exposure of greater than Rs 25 crore and were under stress due to the Covid-19 pandemic.
But of the Crisil sample, only 1 per cent indicated that they would apply for OTDR. This is despite two-thirds of the rated entities being eligible based on the parameters proposed by the K.V. Kamath Committee set up by the RBI.
Subodh Rai, Senior Director, Crisil Ratings, said: “Improving business sentiment on account of increased economic activity over the past couple of months, and expectation of a sharp recovery next fiscal are persuading borrowers to skip OTDR.” “Another deterrent is the impact on the borrower’s long-term credit history – accounts of those opting for OTDR would be classified as restructured advances by lenders, which could impact their ability to raise debt in future.” Additionally, for 44 per cent of Crisil-rated corporates, more than three-fourth of their debt comprises short-term working capital facilities. In these cases, availing of OTDR would have negligible benefits, as the resolution plans under this scheme are focussed on deferring principal repayment of long-term debt.