Canara Bank Loan Restructuring Scheme

Last Updated : Oct. 15, 2020, 4:36 p.m.

Keeping in line with the RBI’s Resolution Plan, Canara Bank has announced its One-time Restructuring Scheme for those borrowers who are affected financially by the COVID-19 pandemic. As you know that the previous 6-month moratorium provided by the RBI ended on August 31, 2020, during which customers didn’t need to pay their loan installments. But the interest kept getting charged on that amount. With the Canara Bank Loan Restructuring Scheme, borrowers will be able to increase their loan tenure by a maximum of 24 months or they can convert the accrued interest or any interest to be accrued into another credit facility. By extending the tenure, the outstanding loan balance can be paid off.

This article could be a good read for existing Canara Bank customers wanting to learn about the Canara Bank Loan Restructuring Scheme. We will talk about the Resolution Plan for Personal Loans and MSME Loans with Canara Bank Loan Restructuring Scheme, along with the loans that will get covered under this scheme, etc. First, we will talk about Personal Loans. Keep reading to know more!

Canara Bank Loan Restructuring Scheme Benefits for Personal Loan Borrowers

With the Canara Bank Loan Restructuring Scheme, existing customers of Canara Bank can get a wide range of benefits such as rescheduling their payments, converting the accrued interest or to be accrued into another credit facility, etc. Such borrowers must have faced some financial difficulty due to the COVID-19 pandemic. We are showing some of the benefits below. Please check!

• Borrowers can increase their overall loan tenure by a maximum of 24 months by using the Moratorium option or rescheduling their repayments. With an increased tenure, the monthly repayment obligations will also be reduced. The reason: EMI amount will be reduced. However, the overall interest payable over the tenure will increase due to the extension.
• Customers can also convert the accrued interest amount or any interest to be accrued on their loans into another credit facility for upto 2 years
• Canara Bank will assess the income streams of borrowers before making a final decision.
• Canara Bank will report your loan facility to all the leading credit bureaus as ‘Restructured’. So, you don’t need to worry about any kind of dent in your credit report.

Canara Bank Loan Restructuring Scheme Eligibility

It is important to know which type of borrowers would be eligible for Canara Bank Loan Restructuring. Canara Bank has put a few conditions that a customer needs to fulfill to enjoy the restructuring benefits. So, what are those conditions? Let’s know them below.

• Your loan account should be classified as ‘Standard’ and should not be in default for more than 30 days as on March 1, 2020.
• Loan Accounts should continue to be classified as ‘Standard’ till the date of invocation of resolution under the Canara Bank Loan Restructuring Scheme
• Borrowers who have been impacted financially due to the COVID-19 pandemic in the form of Salary Cuts, Job loss or Business Closure. Canara Bank will assess the impact through documents and information you will provide. The impact will be defined by the reduction in income and the financial difficulties caused by the same.
• Canara Bank Loan Restructuring Scheme is available to all personal loans with some exceptions. To know about the exceptions, you can visit the official website of Canara Bank.
• Customers can resolve their outstanding debt until the date of March 1, 2020, with Canara Bank Loan Restructuring Scheme
• If you have pledged any security or collateral against the loan facility and want to restructure your loan, existing securities shall continue to be extended for the restructured loans

Processing Fees and Other Charges

Customers will need to pay a certain processing fee to opt for Loan Restructuring. Canara Bank has fixed this processing fee as 0.1% of the outstanding loan amount, subject to a minimum and maximum of INR 1,000 and INR 10,000, respectively.

What is the Last Date to Apply for Loan Restructuring Scheme?

Before applying for the Canara Bank Loan Restructuring Scheme, you should know about the last date to apply for it. Canara Bank has clearly stated in its FAQ that any resolution under this scheme shall not be entertained after December 31, 2020, and benefits must be implemented within 90 days from the date of invocation.

Canara Bank MSME Loan Restructuring Scheme Benefits

Canara Bank Loan Restructuring Scheme is also available for MSME Borrowers whose financials have got impacted by the COVID-19 pandemic. So, what are the benefits that existing MSME borrowers can enjoy with this one-time loan restructuring scheme? Let’s know all of them below.

• With this scheme, borrowers can modify their terms of advance which would generally include several things like Alteration of the Repayment period, Rephasing or Rescheduling of the Repayment period in case of an outstanding term loan with or without a change in the remaining repayment tenure/ installments
• MSME borrowers can also reschedule their payment of outstanding interest amounts on their loan facilities
• Customers can also opt for Fresh Finances if envisaged as per the Canara Bank One-time Restructuring Plan
• All these benefits will be given after assessing the Techno-economic viability of the MSME Unit, so the final decision regarding the restructuring will be taken by Canara Bank
• The One-time Loan Restructuring scheme will be implemented by March 31, 2021, without any downgrade in the asset classification

Who will be Eligible for the MSME Loan Restructuring Scheme?

There are a few conditions that a borrower needs to qualify for applying for Canara Bank Loan Restructuring Scheme. We are showing them below. Have a look!

• The MSME Borrower’s account should be classified as a ‘Standard Asset’ as on March 31, 2020
• The overall exposure (including non-fund based facilities) of Banks and NBFCs to the MSME Borrower should not exceed INR 25 crores as on March 1, 2020.
• The entity of the MSME Borrower should be GST-registered on the date of implementation of loan restructuring. However, such conditions don’t apply to MSME Borrowers who are exempted from GST registration. The eligibility for such borrowers shall be determined based on the exemption limit obtained by the borrower as on March 1, 2020.
• The loan restructuring of the borrower should be implemented by March 31, 2021.