Banks are biased towards privileged customers or large companies when they restructure corporate loans and are not tweaking loan terms objectively, said KC Chakrabarty, the deputy governor of Reserve Bank of India. ?Maybe restructuring is not objective and the process is not transparent,? he said at an event organised by Centrum Broking Ltd.
Chakrabarty said that while restructuring viability aspects may have been compromised and in some cases banks may have opted to restructure to avoid a rise in their bad loans.
He observed that most of the restructured assets have been by only public sector banks and private banks have not restructured a large part of their loan book. Chakrabarty expressed concern over the pace and quantum of restructured accounts over the last several quarters. He said that 15-20% of the restructured loans turn bad.