RBI steps in for retail borrowers: Offers fresh restructuring, extension for recast loans

If you are worried about your upcoming EMI payments, given the precarious COVID-19-induced economic situation, there is relief coming your way.

In light of the devastating pandemic and its economic impact, Reserve Bank of India(RBI) governor Shaktikanta Das on Wednesday rolled out a host of measures aimed at easing the distress.

Restructuring loans

The central bank has allowed banks to restructure loans of individual borrowers of up to Rs 25 crore for those who hadn’t availed of such facilities earlier. “Borrowers…having aggregate exposure of up to ₹25 crore and who have not availed restructuring under any of the earlier restructuring frameworks…and who were classified as ‘Standard’ as on March 31, 2021, shall be eligible to be considered under Resolution Framework 2.0,” Das said. Banks and borrowers will have a window of up to September 30, 2021 to invoke the plan, which will then have to be implemented within 90 days.

Put simply, your loans can be restructured under the new framework 2.0 only if you have not availed of such facilities earlier. Also, your repayment record needs to be clear as on March 31, 2021.

Not all can apply for a recast

If you had signed up for the restructuring framework announced in August 2020 (termed resolution framework 1.0), you will not be eligible under this new framework. However, banks will be allowed to extend the moratorium period for up to two years. The resolution framework 1.0  announced in August 2020 had allowed banks to come up with restructuring plans for their borrowers. This included rescheduling of EMI payments, conversion of any interest accumulated into another credit facility, or extension of moratorium, after assessing borrowers’ income streams, for up to two years.

It is, however, not yet clear if those who had taken the six-month EMI moratorium first announced in March 2020 to tide over the immediate fallout of COVID-19, could also make use of this relaxation.

For banks, Das also announced a liquidity window of ₹50,000 crore with tenure of up to three years at the repo rate. This will be available till March 31, 2022. Under the scheme, banks will be able to sanction loans to a host of entities engaged in the healthcare field and also patients for treatment.