Indian commercial banks have approached India’s central bank, the Reserve Bank of India (RBI), seeking an amendment to the scheme for the restructuring of stressed debts as present norms do not permit such restructuring for most Indian steel companies, a senior official at a government-owned bank said on Tuesday, June 28.
The official said that, in the case of several Indian steel companies, their present cash flow is not enough to service even one-third of their total debt liabilities, whereas the RBI-sanctioned restructuring scheme for stressed debt mandates that commercial banks could undertake debt restructuring only for those companies whose existing cash flows could service at least 50 percent of total debt in a sustainable manner.
According to estimates, a total debt of $31 billion extended to Indian steel companies has been categorized as stressed.