SBI launches e-facility for restructuring of retail loans: What should you do?

By: |
September 22, 2020 3:32 PM

SBI has launched e-facility for restructuring of retail loans for borrowers affected by Coronavirus and has also issued a set of FAQs on the resolution framework for the COVID-related stress.

SBI, state bank of India, restructuring of retail loans, SBI launches e-facility for restructuring of retail loans, RBI, home loans, car loans, education loans, personal loans, What should you do,To qualify for the moratorium, you must be able to conclusively show that your income has been impacted by the pandemic.

The State Bank of India (SBI) has launched e-facility for restructuring of retail loans for borrowers affected by Coronavirus and has also issued a set of ‘Frequently Asked Questions’ (FAQs) on the resolution framework for the COVID-19 related stress for the loans eligible for restructuring.

Industry experts say the SBI’s latest announcement about how the existing borrowers of its retail loans can now check online whether they’re eligible for a loan restructuring or not would be welcomed by people who have been struggling to repay their loans due to the economic fallout of the Covid-19 crisis. Following the Supreme Court’s interim order to extend loan moratoriums until September 28, the latest announcement by SBI would provide additional relief to stressed borrowers.

According to the bank, eligible borrowers of home loans, car loans, education loans and personal loans can now avail moratorium of up to a maximum 24 months or would be allowed rescheduling of instalments and extension of tenure by a period equivalent to the moratorium granted, subject to a maximum of 2 years.

“To qualify for the moratorium, you must be able to conclusively show that your income has been impacted by the pandemic. Salaried employees would need to furnish salary slips or account statements indicating salary reduction or suspension, or job loss during the lockdown. Self-employed borrowers would need to furnish a declaration, indicating closure or reduced business activity during lockdown. Only accounts that existed in the bank’s books on March 1, 2020 will eligible for restructuring. The loan also needs to be a standard loan and should not be in default for more than 30 days as on March 1, 2020,” says Adhil Shetty, CEO, BankBazaar.com.

What Should You Do?

Although this announcement will provide some relief to the people hit hard by the Covid-19 pandemic, however, this also need to be noted that interest will continue to accrue on the deferred EMIs during the moratorium and an additional interest of 0.35% p.a. will be charged in the remaining tenure of the loan.

As such, “borrowers would be well advised to be extremely cautious before opting for the loan restructuring as it could not just substantially increase their loan burden over the long term, but also extend their loan tenure. Borrowers currently facing cash-flow issues should first see whether they could continue repaying their loans without taking the help of a restructuring plan and opt for it only when they’re convinced they have exhausted all other options,” advises Shetty.

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