Indian firms show minimal interest in RBI's restructuring 2.0: CRISIL

28 Aug '21

2 min read

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Barely 1 per cent of eligible companies in the portfolio of CRISIL Ratings has opted for, or is contemplating, the debt restructuring facility offered by the Reserve Bank of India (RBI) under its Resolution Framework 2.0, according to a survey of close to 4,700 companies. Nearly 95 per cent of those opting for or inclined to seek restructuring belong to the sub-investment grade rating category.

This indicates investment-grade rated corporates are showing high resilience, CRISIL said in a press release.

These are preliminary readings from the survey, and may not be reflective of the inclination among those not rated by CRISIL Ratings. In particular, most of the micro and small enterprises in India are unrated.

RBI announced the scheme on May 5, 2021, for borrowers, including individuals, small businesses and micro, small and medium enterprises (MSMEs) with aggregate exposure of up to ₹25 crore provided they had not availed of benefits under any of the earlier restructuring frameworks (including Resolution Framework 1.0 dated August 6, 2020), and were classified as standard accounts as on March 31, 2021.

On June 4 this year, the RBI raised the aggregate debt threshold to ₹50 crore from ₹25 crore.

This increase in threshold led to about two-thirds of the CRISIL-rated mid-sized companies becoming eligible for the restructuring 2.0 scheme.

The fact that only a handful of companies are exploring the restructuring option could be reflective of a relatively improved business outlook accompanying a pick-up in economic activity in the aftermath of the pandemic's second wave, the rating agency added.

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