Indeed, if restructured loans are added on top of banks’ NPLs on one side, and claims on collateral on top of loan loss reserve on the other side, it will be apparent that the latter barely covers the former. If the collateral are aggressively marked to market or a significant portion of restructured loans turns sour, banks would find themselves in trouble. Thus while the capital adequacy ratio of 13.41 percent at end- 2003 leave banks with some cushion for shocks, the risk from further deterioration of asset quality is nonnegligible and continues to make banks reluctant to lend.