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RBI Announce Restructure Of Loan Repayment Without Any Hassle, Check How

By on August 8, 2020 0 1768 Views

The Reserve Bank of India has given people the biggest relief in terms of finances. It has given permission to banks to restructure the loans. This means that loan borrowers can now change their loan repayment period, their interest rates, etc. But not everyone is allowed to restructure it.

Restructuring Loan Repayment: What Did The RBI Announce?

RBI announced that loan lenders can now change the loan repayment terms with the loan borrowers who are financially hit by the pandemic. Loan repayments could have been restricted even before this announcement, but banks had to declare the loan borrowers defaulters and their loans as non- performing loans to do that.

With this announcement, lenders will not have to declare the borrowers as defaulters. However, this restructuring facility will be provided only to those borrowers who are hit by the COVID-19 lockdown and not by any other problem.

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What Is The Eligibility Criteria?

This policy change will cover all personal loans and corporate loans that are hit by the COVID-19 lockdown. However, MSME loans with an outstanding amount of less than Rs 25 crores, farming loans, and loans to governmental bodies can not be restructured.

Another thing to be noticed here is that only those borrowers will be eligible to restructure their loans who were making timely repayments. If any repayment is due for more than 30 days, the borrower will not be eligible for the scheme.

Loan taken from any kind of financial institution like public banks, private banks, co-operative banks, NBFCs, etc will be covered under this scheme. The last date to restructure the loan repayment is December 31, 2020.

What Exactly Are The Benefits?

A borrower can talk to the lender and reschedule the time period of repayments, he/she can convert the accrued interest into a different small loan and the biggest relief – even a moratorium of two years can be granted if the lenders allow to.

The eligible account will be treated as a standard account, and not a defaulter account and the CIBIL score will also be maintained accordingly.

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Talking about this policy change, RBI Governor Shaktikanta Das said on Thursday, “It has been decided to provide a window under the June 7th Prudential Framework to enable lenders to implement a resolution plan in respect of eligible corporate exposures – without a change in ownership – as well as personal loans, while classifying such exposures as standard assets, subject to specified conditions.”

The step seems even bigger than that of moratorium announcement. Now, it depends on financial institutions how much are they going to comply with this new policy.

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