If you have a bank loan that you are unable to pay, restructuring is on its way

All loans, including personal loans, can be restructured as per RBI's new resolution framework windowBCCL

  • The Reserve Bank of India (RBI) is looking at the one-time restructuring of all loans, which includes personal loans as well.
  • Provided you didn’t default on your loans as of 1 March 2020, you can apply to change the payment plan on your loan.
  • RBI has set a deadline of 1 December 2020 for all restructuring requests to be put into play and implemented within 90 days of being invoked.
Car loans, home loans, or any kind of personal loan that you couldn’t make the payments on are now eligible for restructuring. The Reserve Bank of India (RBI) announced that it will open up a window for a one-time restructuring of loans — all loans — that were impacted by COVID 19.

Loans under moratorium with banks across India as a percentage of total outstanding loans RBI Financial Stress Report/BI India

This means that you’re struggling to pay off your personal loans, you can ask the bank to modify the terms of repayment, get additional credit to rebuild or even extend the moratorium period.

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The minimum credit requirement is that you should not have defaulted on your loan payments as of 1 March 2020 or within 30 days of that day. The outstanding amount of debt at that point of time will be considered for restructuring.

You have till 31 December to push for a new payment plan
As per the RBI’s circular, resolution under the new mechanism has to be invoked by 31 December 2020. Once invoked, it must be implemented within 90 days. However, RBI suggests that banks and other lending institutions should try and kick off their plans earlier than the due dates.

The resolution could include the following features:

  • Rescheduling of payments
  • Conversion of interest accrued into another credit facility
  • Granting of moratorium
  • Modification of overall tenor of the loan
The terms and conditions of how this will be determined depending on your projected income streams over the next two years.
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Provided the restructuring plan is put in place within the stipulated timeline, then your loan will not be classified as a non-performing asset (NPA). However, if that is not the case then rating of the loan will be done as per the borrower’s actual performance.

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