mumbai the threat of third wave of covid19 poses high risks to banks asset quality especially the restructured loan book according to a report by domestic rating agency icrabesides bad loans lenders are likely to see challenges on profitability and solvency fronts due to the disruption caused by the omicron variant of coronavirus the agency saidit also sees a 1520basis point uptick in restructuring requests from the borrowersthe agencys vicepresident financial sector ratings anil gupta said with the increased spread of the new covid19 variant ie omicron there is a high possibility of the occurrence of a third wavehe added that a third wave poses a high risk to the performance of the borrowers that were impacted by the previous waves and hence poses a risk to the improving trend of asset quality profitability and solvencygupta also said banks restructured most of the loans with a moratorium of up to 12 months hence the restructured book is likely to start exiting the moratorium from q4 fy2022 and q1 fy2023during the two waves of the pandemic the reserve bank of india rbi announced resolution framework 10 and 20 to provide relief to the borrowers and bankswith incremental restructuring under covid 20 scheme the overall standard restructured loan book for banks increased to 29 per cent of standard advances as on september 30 2021 two per cent as on june 30 2021 the report saidmost of this restructuring includes borrowers impacted by covid 10 and 20the agency said the restructuring under covid 10 scheme is estimated at 34 per cent or rs 1 lakh crore of the total standard restructured loan book of rs 285 lakh crore for banks as on september 30 2021and under covid 20 it is estimated to be at 42 per cent or rs 12 lakh crore the balance comprised micro small and medium enterprises msmes and other restructuring it saidthe report added that banks have implemented about 83 per cent of the total requests received under covid 20 leading to an overall restructuring of rs 12 lakh crore of loans till september 30 2021as the restructuring requests can be implemented till december 31 2021 under covid 20 scheme incremental restructuring could increase by 1520 bps from the current levels the agency saidgupta added that the third wave could revive the demand for the restructuring of loans including those that were already restructuredin such a case visibility on the performance of the restructured loan book which was earlier expected in fy2023 may now be expected in fy2024 as the moratorium on the existing restructured loans could be extended he saidas per icras estimates 60 per cent of the total restructuring of rs 1 lakh crore under covid 10 was accounted for by corporates and the balance or rs 04 lakh crore by the retail and msme segmentshence the restructuring under covid 20 which was available for retail and msme borrowers stood at 3x of the restructuring under covid 10 it saidthe report said the restructuring also led to