₹1 trillion of retail loans to get restructured by banks. While that may be a modest 4% of the ₹25 trillion retail loan pile in the system, it nevertheless takes the total stressed loan portion to 6%, something unseen in the past.
Also, this is the floor which analysts see and actual numbers could be higher. “Anything above 4-5% in retail restructuring should start to worry banks.
As such, restructuring only increases the indebtedness of a retail borrower which is not healthy," said an analyst requesting anonymity.Incipient signs of trouble are already visible.
Firstly, Reserve Bank of India’s financial stability report shows that bad loans in retail were already climbing before the pandemic.