Loan Restructuring870 views
- How Can the SBI Loan Restructuring Scheme Benefit Borrowers Who are Adversely Affected by COVID-19?
- How to Apply for SBI Loan Restructuring Scheme and what are the documents you will need to submit?
The Reserve Bank of India (RBI) has announced the Resolution Plan for borrowers affected by the COVID-19 pandemic. The largest lender of our country, State Bank of India (SBI), decided to be the first to follow suit and launched an exclusive online portal dedicated to the Loan Restructuring for its borrowers. With the SBI Loan Restructuring Scheme, the moratorium period for all types of Retail Loans can be extended by a maximum of 2 years. Borrowers will also have the option to reschedule their installments by extending a tenure by a period equal to the moratorium period.
The exclusive online portal of SBI will help borrowers affected by COVID-19 stress check their eligibility online for the one-time loan restructuring. So, this means that all the customers will not be eligible for the loan restructuring and SBI will take the final decision related to any aspects of it. First thing first, the scheme is available to only those who have opted for a retail loan before March 1, 2020, and they have made their repayments on time till the said date. The primary purpose of the SBI Loan restructuring scheme is to provide financial relief to the borrowers facing difficulties because of the COVID-19 pandemic.
We are showing some of the important aspects related to the SBI One-time Loan Restructuring Scheme in this post that can be pretty useful for you. Some of them are how to apply for it, eligibility criteria, required documents, change in pricing, etc. Keep reading to know more.
Table of Contents
- 1 SBI Loan Restructuring Scheme Benefits that Borrowers will Get
- 1.1 What is the Eligibility for SBI Loan Restructuring Scheme?
- 1.2 SBI Loan Restructuring Scheme Pricing Change
- 1.3 Which Types of Loans Will be Covered Under the SBI Loan Restructuring Scheme?
- 1.4 How to Apply for SBI Loan Restructuring Scheme?
- 1.5 Required Documents for SBI Loan Restructuring Scheme
SBI Loan Restructuring Scheme Benefits that Borrowers will Get
So, what are the relief or relaxations borrowers will get through SBI Loan Restructuring Scheme? Well, with this scheme, borrowers can opt for an additional Moratorium period than the earlier Moratorium granted by the Bank. During this period, they don’t have to pay any EMIs on their loans provided they are eligible for it. We are showing some of the prominent benefits below. Have a look.
- Borrowers can opt for the Loan Moratorium upto a maximum of 24 months. However, interest will keep getting charged on your outstanding balance during this period.
- Borrowers can reschedule their installments and extend their tenure by a period equal to the Moratorium granted by the Bank (maximum of 24 months)
- The maximum age upto which the loan tenure can be extended will depend on the type of loan for which borrowers want the benefit. For example, in the case of a Home Loan, a borrower cannot extend his tenure over 77 years of age with the Loan Restructuring.
- After the extension of loan tenure, there will be a change in your EMI amount that will be informed to you by SBI. However, if you surplus cash at your disposal, you can keep paying your EMI as before to reduce the interest amount.
- Borrowers can apply for the Loan Restructuring Scheme for more than one loan account. It means if you have both SBI Personal Loan and SBI Car Loan, you can extend your tenure on both these loans.
What is the Eligibility for SBI Loan Restructuring Scheme?
So how can you know if you are eligible for the SBI Loan Restructuring Scheme or not? Well, SBI has released an FAQ regarding the scheme where the conditions are mentioned clearly. Have a look at them below.
- A borrower will be considered as affected by the pandemic if his/ her Monthly Income or Salary in August 2020 has reduced as compared to the one he/she must have been getting in February 2020.
- When a borrower has faced any temporary reduction or suspension of the salary during the lockdown period announced by the government.
- SBI will treat a borrower as someone affected by the pandemic in the case of Job Loss or Business Closure after March 1, 2020.
- In the case of Self-employed/ Professionals/ Businessmen borrowers, closure during a lockdown or reduced activity of units/shops/business establishments will be considered as affected.
- An individual who is affected by the pandemic but has taken a loan after March 1, 2020, will not be considered eligible for the Loan Restructuring Scheme. Your Loan account must have existed in the lender’s book on or before March 1, 2020.
- Borrowers whose present income is not affected but they might have to face an income loss in the future are also not eligible for loan restructuring.
SBI Loan Restructuring Scheme Pricing Change
When you apply for the SBI Loan Restructuring Scheme, there will be a change in the Loan Interest Rate for the remaining tenure of the loan. So, what is the interest rate that SBI will charge on a restructured loan? Well, borrowers will need to pay an additional interest rate of 0.35% per annum over and above the current pricing. Let’s understand this through an example. Suppose an individual has a 5-year personal loan of INR 4 lakh at an interest rate of 10.00% per annum.
After opting for the Loan Restructuring Scheme, the new interest rate will be 10.35% per annum (10.00 + 0.35) that a customer will need to pay at, for the remaining tenure. Due to an increase in the interest rate, the EMI amount will also increase and so will the interest outgo.
Which Types of Loans Will be Covered Under the SBI Loan Restructuring Scheme?
While going for the extended Moratorium, it is important to know which type of loans will be covered under this scheme. We are showing all types of loans that will come under it. Check it out.
- Housing Loan and Other Related Loans
- Personal Loans
- Auto Loans such as 4-Wheeler & 2-Wheeler Loan ( Other than Loans for Commercial Purposes)
- Education Loans
But it is not necessary if you have opted for any of these loans, you will get this scheme. To be eligible for loan restructuring, you should remember that your loan should be a ‘Standard Account’. When you are going to apply for this scheme, your loan should not have any kind of default for more than 30 days on March 1, 2020. If you haven’t been making the repayments on time, you might not be eligible for this scheme. Besides, the borrower needs to convince the lender about the difficulties in repaying loans. The lender might ask you to submit the bank statement to verify your claims.
How to Apply for SBI Loan Restructuring Scheme?
Now comes the most important question – How to apply for the SBI Loan restructuring scheme? Well, borrowers can visit the official website of SBI and apply for it there. On logging in to the portal, borrowers will need to fill in their Loan Account Number. On putting this, they would receive an OTP on their registered mobile number. After completing the validation of OTP and feeding a few other information, the bank will inform the borrowers about their eligibility. On being eligible, they will get a reference number which will be valid for 30 days.
Other than the online method, borrowers can also visit the branch where they have taken their respective loan/s and complete the required formalities there too. Remember that the SBI loan restructuring process will be completed only after the verification of documents. We are showing the list of documents that you will need to submit, in the next section.
Required Documents for SBI Loan Restructuring Scheme
After finding that you are eligible to apply for the SBI Loan Restructuring Scheme, you will need to upload online or submit at the branch a set of documents. We are showing all of them. Please check them out.
- Copies of Salary Slips for February 2020 and Current or Latest Salary Slip (To check if there has been a reduction)
- A Declaration about the estimated Salary/Income immediately after the end of the Desired Moratorium Period which can be a maximum of 24 months
- In the case of Job Loss, Termination Letter or Letter of Discharge from Job
- Bank Account Statements of the Salary Account in the case of Salaried Employees for the period from Feb 2020 till 15 days before submission of Application
- Statement of Operating Account in case of Self-employed borrowers for the period from Feb 2020 till 15 days before the submission of the application
- Declaration by Self-employed Professionals or Businessmen stating that their business is affected by COVID-19
The last date of applying for an SBI Loan Restructuring Scheme is December 24, 2020.