The recent RBI allowance of restructuring of loans (without changing ownership or downgrading the borrower) for retail individuals, corporates, MSMEs is quite a game changer. This effectively means that the NPAs will remain hidden for years (i believe the restructuring allows for tenure extensions as well as moratorium extensions up to 2 years).
Couple of videos I saw on this:
My take: This is quite a smart move on RBI’s part. The conditions make it quite clear that this only applies to entities who have been affected by Covid19. The conditions are pretty strict. There are enough entry barriers. As of March 1, you should be a standard account to get a restructuring. The restructuring should be decided by Dec’20. Banks need to keep 10% provisions on post-resolution debts.
For large corporate loans, the restructuring has to be vetted by a central committee/panel headed by KV kamath. The most strict rule is that 30 days of default would tag the account as NPA. The rules are really strict. At the same time, they allow breathing room for a genuinely impacted entity.
Disc: invested, full portfolio is on this thread.