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HDB Financial Services Loan Restructuring Scheme

Highlights

  • How can HDB Finance Services Loan Restructuring Scheme help financially affected borrowers due to COVID-19?
  • What is the process to apply for HDB Finance Services Loan Restructuring Scheme and what are the loans that will be covered under this?

The COVID-19 related disruptions have impacted the financials of many individuals who have taken loans from banks or financial institutions. To give some relief to such customers, the Reserve Bank of India (RBI) provided a Moratorium period until August 31, 2020, during which customers had the option to not pay their loan installments. Now, to give extended relief to customers, RBI has provided a Resolution Framework wherein lenders are advised on how to carry out the loan restructuring for borrowers. Based on the framework and Regulatory guidelines issued by RBI, HDB Financial Services has come out with a Loan Restructuring Scheme for borrowers affected by COVID-19.

With the HDB Loan Restructuring Scheme, individuals and entities can get their loans restructured by either extending their repayment period by upto 24 months or availing a moratorium. Although not every customer will be eligible for HDB Financial Services Loan Restructuring Scheme, HDB will review the financial impact in the form of reduction of income or job loss and then make the final decision.

We will discuss some of the important aspects related to the HDB Financial Services Loan Restructuring Scheme. These aspects are benefits a customer can get, eligibility, application process, required documents, etc. So, keep reading!

HDB Loan Restructuring Scheme Benefits

As we told earlier, the HDB Financial Loan Restructuring Scheme allows financially affected borrowers to extend their repayment tenure by upto 24 months. So, individuals who have been facing some difficulties in paying the loan EMIs can opt for an extended tenure. Extended because HDB had already provided a 6-month Moratorium period until August 31, 2020. Below are some of the benefits of the HDB Loan Restructuring Scheme that you can see.

  • The maximum additional repayment tenure that a borrower can opt for is fixed at 24 months
  • Customers can opt for the HDB Loan Restructuring Scheme only if the balance tenure of the loan should be greater than 12 months (1 year) as on September 30, 2020
  • On extending the repayment tenure, the EMI amount will reduce but accumulated EMI payments over the loan term will increase. Also, you may end up paying a higher interest amount on your loan amount as HDB will keep charging interest on your loan amount during the tenure.
  • The best thing about HDB Loan Restructuring Scheme is that there will be no impact on your credit score. The reason: your loan facility will be reported to all the credit bureaus as ‘Restructured’ under the prudential framework.
  • The outstanding principal loan amount that can be restructured with the scheme should be higher than INR 1,00,000 as of September 30, 2020. For example, if you have INR 50,000 as the principal outstanding balance on your personal loan, your loan facility will not be eligible for restructuring.
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HDB Financial Services Loan Restructuring Scheme Eligibility

Not all customers will be eligible for HDB Financial Services Loan Restructuring Scheme Eligibility. So, what are those conditions that a borrower needs to fulfill if he/she wants to opt for this scheme? Let’s know about them below.

  • The first condition you need to meet to be eligible for HDB HDB Financial Services Loan Restructuring Scheme is that a loan should be booked only before March 01, 2020, and classified as ‘Standard’
  • This ‘Standard’ classification should remain as ‘Standard’ across loans and other credit facilities availed by individuals and entities until the restructuring application
  • The borrower should not have more than one EMI overdue in any of the loans as of February 29, 2020
  • The balance tenure should be greater than 12 months (1 year) as of September 30, 2020, and when it comes to the Principal Outstanding Balance, it should be greater than INR 1 lakh as of September 30, 2020
  • The borrower must have faced some financial impacts due to the reduction of income to be eligible for the Loan Restructuring scheme.
  • The borrower should show the disruption in cash flow and timely repayments due to the pandemic to get the benefits of the new restructuring scheme. To ensure this, HDB Financial Services will review the documents and other information of customers before making a final decision about a moratorium or repayment period extension.
  • The loan restructuring scheme will not be for those borrowers who didn’t face any income loss but might get affected in the future.
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HDB Financial Services Loan Restructuring Scheme Pricing Change

You must be thinking about whether you will need to pay an additional charge/processing fee while opting for HDB Financial Services Loan Restructuring Scheme. Well, borrowers will need to pay an additional interest rate of upto 2% per annum on the restructured loan facilities when they extend their loan tenure.

Other than this, HDB will also charge a Restructuring Fee on your loan facilities if you choose to restructure your loan amount. This fee will be upto 1% of the outstanding principal amount of your loan accounts. Borrowers will need to make this upfront payment of the processing fee.

Which Type of Loans is Eligible for Restructuring?

Before applying for the HDB Financial Services Loan Restructuring Scheme, you should know if your loan will be eligible for this scheme or not. Regarding this, HDB has released a Restructuring FAQ. We are showing all such loans below. Please have a look.

Consumer Loans

  • Auto Loans such as 2-wheeler and 4-wheeler Loans (Loans for Commercial Usage will not be included)
  • Personal Loans ( Loans for Business purposes will not be included)

Loans to Entities

  • Loan against Property
  • Business Instalment Loan
  • Auto Loans
  • Commercial Vehicle Loan
  • Loans given for purchasing Construction Equipment

How to Apply for HDB Financial Services Loan Restructuring Scheme?

After knowing some crucial aspects of the HDB Financial Services Loan Restructuring Scheme, it’s important to know about its application process. Well, HDB offers mainly two methods to apply for this scheme – Online and Offline. For the online method, you will need to download the ‘Loan Restructuring Application’ from the official website of HDB Financial Services. Fill this form with details like Name, Email id, PAN, Loan Account Number, Mobile Number, and submit this along with relevant documents to the nearest branch.

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For the offline method, you will need to visit the nearest branch and the customer representatives will provide you all the required details about Loan Restructuring. HDB will review your application within 15 working days from the day you applied for restructuring. Borrowers will get an SMS and email about the acceptance or rejection of the application.

Note: The borrower needs to submit the request for restructuring loan facilities on or before December 15, 2020.

Required Documents for HDB Financial Services Loan Restructuring Scheme

As we mentioned in the earlier section, you will need to submit the application form along with a few documents through which the lender can assess the economic impact caused by COVID-19. All these documents need to be self-attested. We are showing the required documents.

For Salaried Borrowers

  • Latest Salary Slips from March 2020
  • Latest Bank Statement from March 2020 for the Account in which salary is credited
  • Proof of Income Disruption
  • Proof for Regularisation of Loan

Self-employed Borrowers

  • Bank account statement for the last 12 months
  • ITR/ Balance Sheet and Profit & Loss account
  • Any other Income Documents
  • Proof of Income Disruption
  • GST Returns for H2 FY2020 and H1 FY2021
  • Plan for Regularisation of Loan

Loans to Firms/Companies/LLP/Partnership Firms

  • Latest Audited Financial Statements
  • Provisional/ Audited financial number for FY 2020
  • Projected Financial Number till FY 2022
  • Proof of Income Disruption
  • GST Returns (if applicable)
  • Plan for Regularisation of Loan

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