Covid-19 Restructuring of loans 2.0 in SBI

The resurgence of Covid–19 pandemic in the first quarter of financial year has created a large impact on the economy of our country. Trade, industry and almost all sectors are severely affected. There was a large scale job loss in our country and abroad. As a relief measure to borrowers, Reserve Bank of India (RBI) issued an order (Resolution framework 2.0) on May 5th to all banks for restructuring of loans. Based on the framework, following guidelines are provided by the India’s largest public sector bank, SBI.

Let us look at some of the salient features of the scheme:

Eligible loans under the package.

• Home loan and allied loans
• Education loan
• Auto loan
• Other Personal loans (excluding gold mortgages)
• Individual Business loans
• MSME Loans up to `Rs.25 crore (It has now been extended up to Rs.50 Crore)

“The account must be a performing asset (Standard) as on 31.03.2021” is the primary condition for eligibility.

Eligible borrowers:

Those with

• Reduction in salary/income
• Reduction/suspension in salary during lock down
• Job loss/ closure of business
• Closure during lock down/reduced activity of units
• Cash flow affected due to lock down and Covid related issues
• Borrower/family member has been affected with Covid

Documents Required:

• Salary slip Feb 2020 and current
• Letter of termination/discharge from job
• For self employed/business – Simple declaration

Scope of Resolution:

• Moratorium up to 24 months ( Those who availed moratorium under resolution framework 1: Moratorium will be given for 24 months less the earlier availed moratorium period).
• Rescheduling of instalments and extension of tenure up to a maximum of 24 months.
• No additional interest for Home loans up to 30 lacs and other loans up to 10 lacs.

Similarly for MSME loans, Documents Required:

• Udyam registration certificate
• GST returns from April 2020
• For GST ineligible accounts- Account statement from Jan 2020

Scope of resolution:

• For MSME term loans: Moratorium of up to 2 years can be considered for Principal and interest.
• For working capital facilities: Funded Interest Term Loan(FITL) can be sanctioned for interest portion on WC limit for the moratorium period( up to 24 months) and can be repaid after moratorium period with a term of 24 months.
• The irregular portion of cash credit can be funded as Working capital term loan with a maximum moratorium of 12 months and to be repaid in 7 years after moratorium.
• Additional Bank Exposure: Additional exposure by way of Term loan, Non fund based facilities and additional Working Capital to the tune of 15% to 25% of the total indebtedness (pre rehabilitation).
• Working Capital Term Loan for future cash loss shall be funded in phased manner which should be repaid after 12 months from the date of first disbursement. Interest on Funded Interest Term Loan and Working Capital Term Loan shall be waived for Moratorium period of maximum 12 months.

Those who wish to avail the benefit of moratorium should submit the application before 30th September 2021.

Following is the verified link for submitting request:

SBI Resolution Framework – 2.0

RFP