After State Bank of India (SBI), HDFC Bank too has come out with FAQs on its website with respect to the details of one-time loan restructuring scheme launched as part of the Reserve Bank of India's (RBI's) resolution framework for the COVID-19 pandemic-hit loans.
The FAQs have details on eligibility to avail the scheme and the process that needs to be followed. The section also has information about the different options with respect to the restructuring scheme.
Earlier, SBI had launched an online tool to help borrowers understand the resolution scheme for the COVID-19 pandemic-hit loans. All banks are likely to come out with similar details on their websites soon.
According to the details put out on its website, individuals and entities that are classified as standard, but not in default for more than 30 days with the bank as on March 1, 2020, and continue to remain as standard across all its loans/facilities till date are eligible for restructuring.
The customer has to be impacted financially by the COVID-19 pandemic in the form of reduction/loss of income or cash flows.
According to the FAQs, the reduction of income and its financial impact on the customer will be reviewed by the bank basis the documents/information provided, which does show the drop in cash flow due to the COVID-19 impact.
“The bank will assess the viability of the customer to pay the restructured EMIs basis the documents provided, before granting the restructuring. Apart from the viability calculations, the repayment track record of the customer, and the responses given by the customer while availing moratorium earlier will also be factored in the restructuring decision,” it said.
What is the scheme?
According to the scheme, the balance tenure of the loan can be extended by maximum of 24 months to ease the customer's monthly EMI repayment burden. The bank will levy a charge to the borrower who avails the scheme, it said.
What should customers do?
Customers can visit the bank’s website for the application link to fill the application form and submit the relevant details, or approach the relationship managers. The bank will put out the link for application on its website shortly, the bank said.
The borrower will have to submit documents giving details about the current status of his/her employment or business.
For salaried borrowers - salary slips and bank statement may be required. For self-employed borrowers/entities - bank statement, GST returns, income tax returns, Udyam certificate, etc may be required, the FAQs said.
Will it affect the credit rating?
As per the regulatory guidelines, loan/credit facility will be reported to the credit bureau as “Restructured”, the bank said.
“As per the guidelines, restructuring has to be reported at a borrower level to the credit bureaus and hence all the facilities/loans of the borrower with the bank will be classified and reported as “Restructured” even if the borrower has taken restructuring for only one loan,” the bank said.
As per regulatory and legal requirements, all borrowers/co-borrowers of the original loan need to agree and sign on any changes in the loan structure, including the restructuring agreement, the HDFC Bank FAQs said.
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