New Delhi: In a report, “From Moratorium to Loan Restructuring: The road ahead for India Corporate Inc”, ICRA said the disruption caused by the coronavirus outbreak continues to adversely impact the credit quality of India Inc.
“The Q1 FY2021 performance of most entities has been expectedly weak, with sharp earnings and margin contraction in most sectors, as revenues dwindled much sharper than the costs,” it said in a statement.
The agency has taken a large number of negative rating actions since the onset of the Covid-induced disruption and the lockdown, affecting around 16 per cent of its rated portfolio.
“The instances and the intensity of negative rating actions could have been higher but for the relief availed by the borrowers from lenders in the form of payment moratorium, as permitted by the Reserve Bank of India (RBI),” the statement said.
“Around 27 per cent of ICRA-rated entities availed a moratorium in payments from lenders.”
The statement listed sectors in which there was a greater proclivity to avail a moratorium which included real estate, textiles, hospitality, engineering and auto ancillaries.
“At the system level, ICRA expects the proportion of the overall loan book under moratorium to decline to around 15 per cent by the end of Q2FY2021,” the statement said.
Last month, a RBI circular laid down a framework to enable lenders to implement resolution plans while maintaining the account classification as ‘Standard’, even when the resolution plan does not involve a change in ownership.
