Mumbai, July 6
The COVID-19 pandemic will lead to Rs 1.67 lakh crore of debt owed by top-500 corporates turning delinquent by March 2022, a report mentioned on Monday.
This will take the cumulative quantum of delinquencies to Rs 4.21 lakh crore or about 11 per cent of general debt, India Ratings and Research mentioned in its report.
Concerns over banks’ asset high quality have been repeatedly expressed for the reason that onset of the pandemic earlier this yr. The RBI has allowed a six-month moratorium on mortgage repayments ending August, which has resulted within the stress not being recognised. The authorities has introduced an almost Rs 21 lakh crore stimulus bundle to limit the financial affect of the pandemic.
The ranking company mentioned the pandemic and the “associated policy response” will consequence within the further mortgage stress of Rs 1.67 lakh crore from the highest 500 debt-heavy personal sector debtors getting delinquent.
It mentioned earlier than the onset of the pandemic, it had estimated debt of Rs 2.54 lakh crore to show delinquent until FY’22 and the addition of the Rs 1.67 lakh crore will take the general delinquency to Rs 4.21 lakh crore.
This will represent 18.21 per cent of the company sector’s debt, which is increased than the 11.57 per cent of debt at present thought of as pressured, the company mentioned.
After estimating the slippages, incremental stress and loss given default, the company mentioned the credit score prices – which majorly embody mortgage loss provisioning to be put aside by lenders – will come at 3.57 per cent of the system debt.
However, in a situation the place funding markets proceed to exhibit heightened threat aversion, an additional Rs 1.68 lakh crore of company debt would fall into the pressured class, leading to Rs 5.89 lakh crore of company debt turning pressured by FY22 and depart a 4.82 per cent gap as credit score prices, it mentioned.
The company warned refinancing pressures will persist and securing well timed funding may proceed to show difficult for the personal corporations.
It expects Rs 4.81 lakh crore of recent credit score demand by the highest 500 debt-heavy personal sector corporates to emanate from a mixture of receivable financing and an additional drawdown of unutilised financial institution limits to shore up liquidity, meet money movement shortfalls and to fund varied remoted pockets of capex spending – largely restricted to upkeep capex.
Lenders will favor shorter tenure loans and might be extra selective, which is able to weaken the useful resource mobilisation capacity of decrease rated issuers within the funding grade, it mentioned. —PTI