There are hardly any takers for the debt restructuring facility offered by the Reserve Bank of India (RBI) under its Resolution Framework 2.0. According to CRISIL Ratings, hardly 1 percent of the eligible companies in their portfolio have opted for this scheme.

Share Market Live

NSE

Of the 4,700 companies the ratings company surveyed, 95 percent of those opting for or inclined towards restructuring belong to the sub-investment grade rating category.

Within the sub-investment grade companies, four out of five are rated in the ‘B’ or lower rating categories. This indicates that only companies with weak credit quality are in the mood for restructuring. However, if there is a third COVID-19 wave or any weakening of sentiment during the recovery, more companies are likely to seek the restructuring 2.0 scheme.

The RBI had announced the scheme in May for borrowers, including individuals, small businesses, micro, small and medium enterprises (MSMEs) with an aggregate exposure of up to Rs 25 crore. These borrowers should not have availed of the benefits under any of the earlier restructuring frameworks (including Resolution Framework 1.0 2020) and were classified as standard accounts as on March 31, 2021.

In June, the RBI had raised the aggregate debt threshold from Rs 25 crore to Rs 50 crore.

Nearly two-thirds of CRISIL-rated mid-sized companies became eligible for the restructuring 2.0 scheme as a result of this rise in the threshold limit. However, only a handful of them are considering or even exploring the restructuring option. This could mean that there is an uptick in the economy and an improved business outlook seen by companies following the second wave.

The rating agency also stated that these are only preliminary readings and may not be reflective of the inclination among those not rated by CRISIL Ratings. It should be noted that most of the micro and small enterprises in India remain unrated.

(Edited by : Shoma Bhattacharjee)