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The Covid-19 pandemic has led to financial stress and crisis to major sections in our country. The scheme was launched to help the borrowers who are under stress. Launched in November, the scheme will be in force till 31st January 2021.
The concession in this scheme is the best in the history of the banking industry, and will be beneficial for loan defaulters among agriculturists, SME borrowers and education loan borrowers.
The major attractions of this scheme are-
1. Waiver of notional interest from the date on which the account became a non-performing asset.
2. Waiver of legal and other out-of-pocket charges.
Let us learn a little more about the scheme after understanding the categorization of loan defaulters. The defaulters are generally classified as Non-Performing Assets (NPAs) by the bank. And by the period of the account in default, they are categorized as-
1.Sub Standard Assets (SSA): In this category, the loan is in default for a period of one year from the date it is classified as Non-Performing Asset.
2.Doubtful Assets-1 (D1): In this category, the loan is in default for one more year after remaining in Sub Standard Assets category.
3.Doubtful Assets-2 (D2): In this category, the loan is in default for 2 more years after remaining in D1 category.
4. Doubtful Assets-3 (D3): All the Non-performing Assets above the period in D2 category.
Moreover, the loan accounts are classified as secured and unsecured based on the condition of security available or not available for the loan.
The scheme will be applicable to-
A. Unsecured Substandard Assets (SSA) with a limit sanctioned up to Rs. 3 lacs in Agri segment, Rs. 4 lacs in education loans, and Rs. 10 lacs in SME segment, classified as Sub Standard Asset on or before 31.03.2019.
B. Doubtful Assets (All three- D1, D2 & D3) with an outstanding amount up to Rs. 20 lacs in all segments, except home loans, classified as doubtful assets on or before 31.03.2020.
C. Home loans sanctioned except CMRH (Bhopal) up to Rs. 5 lacs in doubtful category as on 31.03.2020.
The concession for-
a. Sub Standard Assets is for the outstanding balance as on 31.12.2019 along with uncollected interest up to the date of classification of the account as Non Performing Asset.
b. Doubtful Assets is for the outstanding balance as on 31.03.2020 along with uncollected interest up to the date of classification of the account as Non Performing Asset.
The concession (waiver) is as given below-
- The borrower has to deposit minimum 10% of the OTS amount on the date of sanction.
- The borrower has to deposit another 10% of the OTS amount within 30 days from the date of sanction.
- The borrower has to deposit another 10% of the OTS amount within 60 days from the date of sanction.
- The balance amount has to be paid within 8 months from the date of sanction of OTS, together with interest @ 6 months MCLR on reducing balance, effective from the date of sanction of OTS.
If the borrower has paid any amount after 31.03.2019 in case of unsecured Sub Standard Asset, and any amount after 31.03.2020 in the case of Doubtful Assets, the same will be treated as recovery under OTS.
Early Bird Offer-
There will be an additional incentive for full payment of OTS Amount within the stipulated time
- If the payment is made on or before 31.12.2020, then you will be eligible for a 15% discount.
- If the payment is made on or before 31.01.2021, then you will be eligible for a 10% discount.
- If the payment is made on or before 31.03.2021, then you will be eligible for a 5% discount.
The bank will re-lend to Agri loan borrowers up to Rs. 3 lac category who settle the loan in full after a cushion period of one month. It is highly recommended that the eligible borrowers make use of this One Time Settlement opportunity without fail.