Restructured loans

Loans whose terms have been changed because the borrower could not meet the original ones, typically by extending the tenor, lowering the rate, or granting a moratorium.

Restructuring is a legitimate tool for a borrower with a temporary problem and a viable business. It is also the standard mechanism for postponing recognition of a loss, and the history of Indian banking includes long periods in which restructured books grew while reported bad loans stayed flat.

The disclosure is separate from the non-performing figure, which is exactly why it is worth reading. A bank with 3% gross bad loans and 4% restructured has 7% of its book in difficulty.

Add the two before judging asset quality.