Banks have taken to extensive use of digital tools and systems for assessing and reworking the repayment structure pertaining to retail debt restructuring, especially for customers most hit by the coronavirus pandemic.

Lenders, mostly public sector banks, have formed teams in regional and zonal offices to facilitate debt recast at the branch level. This is for the first time that retail loan restructuring is being worked upon on this scale, because of which there are no precedents to rely upon, say bankers.

According to India Ratings estimates, retail loans — home, personal, auto, and credit cards — amounting to Rs 30,000 crore may come up for recast.

The rating agency has estimated bank loans worth Rs 8.4 trillion to be restructured under the Reserve Bank of India’s framework, of which Rs 6.3 trillion will be corporate loans. The balance will comprise agriculture, retail, and MSME loans.

Bankers pointed out that the number of that availing of the restructuring option will run into hundreds of thousands, even though the amount per borrower will be small.

State Bank of India executives said the bank will use technology to a large extent for simple loans — auto, housing, and personal. Work on this will be system-driven. The handling of personal/consumer loan restructuring will be easier as it does not require an assessment of margins and working capital for corporate credit, the executives added.

Just as in the case of housing loans, SBI will provide some moratorium (extend the tenure) if there is stress and work has been done. Lenders will look at the loan amount, outstanding, and loan-to-value ratio, before deciding the duration, installment, and repayment schedule.

Shalini Warrier, executive director of Federal Bank, said that for retail customers, the need for restructuring normally arises in case of job loss or drastic fall in business.

With the strong support of analytics, Federal Bank will adopt a customised approach based on the segment (salaried or self-employed) and the type of industry the customer works in, she added.

A Bank of India executive also said that the bank has formed a team of 300, with six to seven general managers at the apex level to manage debt restructuring.

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