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HDFC Bank loan restructuring | HDFC Bank 2.0 Loan Restructuring Policy: Check Eligibility, Required Documents, Impact on Credit Score

New Delhi: The Reserve Bank of India’s (RBI) aid measures to borrowers in the form of a three-month loan moratorium program, which has been extended for another three months, ended on August 31, 2020.

The RBI has provided a framework for banks and lending institutions to implement resolution plans to deal with the economic fallout from the COVID-19 pandemic, which has caused significant financial stress for customers. Based on the regulatory framework and guidelines, HDFC Bank has defined its policy for restructuring loans from individuals and entities impacted by the COVID-19 pandemic.

Here is an overview of HDFC Bank Loan Restructuring Policy 2.0 FAQ according to the lender’s website.

1. What is Resolution Framework 2.0?

RBI has provided a resolution framework for credit institutions to implement a resolution plan for eligible borrowers who have been financially impacted due to the resurgence of COVID-19.

2. What are the eligibility criteria for applying for the 2.0 Resolution Framework?

  1. Loan accounts that are classified as standard, as of March 31, 2021, are eligible to benefit from the 2.0 resolution framework.
  2. The borrower must be financially impacted by the COVID-19 pandemic, thereby resulting in reduced / lost income or cash flow.
  3. The Borrower must apply in the prescribed format along with documents certifying the reduction / loss of income. Based on the submitted documents, discussions and / or other checks and verifications, the viability of the customer to pay the restructured IMEs will be assessed before granting a resolution.

3. In case a loan account has benefited from the benefits of RF 1.0, can it benefit from RF 2.0?

When the Borrowers have benefited from a moratorium of less than two years and / or an extension of the remaining term of a period of less than two years under RF 1.0, the plan may be modified under RF 2.0 alone to the extent of increasing the period of moratorium or extension of residual tenure to a maximum of 2 years cumulatively (i.e. including RF 1.0 and RF 2.0).

4. What is the applicable interest rate under RF 2.0?

The applicable interest rate will be 8% per annum or the rate in effect on the borrower’s loan account, whichever is greater.

5. What are the charges for RF 2.0?

A fee of up to Rs 5,000 / – plus tax will be charged as a processing fee for RF 2.0 on each loan account. Fees must be paid prior to implementing RF 2.0.

6. Which loan products are covered by RF 2.0?

RF 2.0 covers the loans to individuals mentioned below:

  1. Home loan, Home extension loan, Home renovation loan, Land loan
  2. Home equity loan used for non-business purposes
  3. Complementary loan used for purposes other than professional.
  4. Additional loans for insurance

Equity loans or any non-real estate loan used for commercial purposes will only be eligible under FR 2.0 if the overall exposure of this borrower (s) to all banks and credit institutions, including Fund-based and non-fund-based loans do not exceed 50 Cr. as of March 31, 2021.

7. Are NRI loans covered by RF 2.0?

Yes, NRI loans are covered by RF 2.0. The documents will need to be executed in India by the borrower or POA.

8. If I have more than one loan, do I have to apply for each loan separately?

Yes, for each loan a separate application must be submitted.

9. I have made use of the loan with the co-applicant. Should we apply together?

The lead applicant can apply in the prescribed format with all supporting documents. The RF 2.0 implementation agreement will be signed by the borrower and all co-borrowers.

10. What documents will be required for the evaluation of loans under RF 2.0?

The borrower will have to submit an application in the prescribed format along with the supporting documents required by HDFC. The following documents would be required to be collected in support of the borrower’s claims:

  1. For salaried customers –
    1. Letter of termination / notice of discharge,
    2. Bank account statements (last 6 months),
    3. At least 2 last payslips / certificates, etc.
    4. Any other document required by the evaluation team.
  2. For independent customers –
    1. Latest returns from TPS / Sales book,
    2. Letter of termination of contract / work order,
    3. Provisional accounts for March 2021
    4. Form 26AS,
    5. Electricity / Telephone Invoice for commercial premises,
    6. Copy of the termination notice received from the tenant / Rent reduction,
    7. Bank account statements (8 months)
    8. Any other document required by the evaluation team.
  3. In addition to the above loss of income / financial stress will be checked from –
    1. Bureau reports,
    2. Customer credit checks (CCV),
    3. Repayment track for all loans taken out by the customer with the IMEs / last payment date,
    4. Stock details / Accounts receivable / other commercial assets,
    5. Copy of the notice given to the landlord for termination / rent reduction, etc.
    6. Any other document required by the evaluation team.
  4. Details of institutional loans outstanding as of March 31, 2021.
  5. MSME / Udyam registration details (if available)

The list of documents mentioned above is indicative and may vary from case to case. All supporting documents / reports will be kept on file as proof of financial difficulties faced by the borrower.

11. What is the deadline for submitting an application under this facility?

The deadline for submitting / receiving an application in the prescribed format with supporting documents is September 25, 2021. Applications regarding or related to RF 2.0 will not be considered as a request for review of RF 2.0.

12. How can I request the restructuring of my HDFC loan?

For any RF 2.0 related inquiries, please write to us at [email protected] using your registered email id. Please include your case number in the subject line of the email. To benefit from this advantage, the borrower must present up-to-date documents. The submission of the application / documents or the completion of an investigation does not entitle the borrower to RF 2.0 and the borrower is subject to assessment / evaluation by HDFC.

13. Does invocation under the resolution framework require borrowers to submit a specific resolution plan?

No. The resolution framework does not require that a resolution plan in any form be submitted to HDFC at the time of the invocation request. Instead, for the invocation, borrowers are required to simply submit an application in the prescribed format along with supporting documents to HDFC for consideration in the resolution framework. Subsequently, HDFC will make a policy decision on invoking the resolution framework. After this invocation, the specific contours of the resolution plan to be implemented can be decided by HDFC in consultation / discussion with its borrowers.

14. Will choosing the restructuring package affect my credit report?

In accordance with regulatory guidelines, your loan / credit facility will be reported to the credit bureau as “restructured due to COVID 19”. If the borrower has a resolution framework for an account, all borrower’s facilities / loans with HDFC will be classified and reported as “restructured due to COVID 19”.

15. Can IMEs, during the moratorium, be lifted?

No EMI exemption can be provided in the frame. IME / Principal Payments can only be deferred and repayment will begin at the end of the moratorium period. However, if the borrower’s cash flow improves during the moratorium period, the borrower can ask HDFC to start repayment immediately. After the start of the repayment period, no further options will be provided for resolution under this window unless instructed otherwise by the RBI.


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