Loan Restructuring

Extract of Policy on Resolution Framework 2.0

Based on the notifications issued by RBI, the Company has adopted the following criteria for implementing the Resolution Plan 2.0 for borrower accounts under stress due to COVID-19.  Specific framework has been laid down below for;

  1. Individuals who have availed personal loans (Referred to as “CAT 1” borrowers)

  2. Individuals who have availed loans and advances for business purposes (Referred to as “CAT 2” borrowers)

  3. Small businesses, including those engaged in retail and wholesale trade, other than those classified as micro, small and medium enterprises (Referred to as “CAT 3” borrowers)

  4. MSME Borrowers (Referred to as “CAT 4” borrowers)

1. Eligibility Criteria

  1. CAT 1 borrowers shall include salaried and self-employed individuals who have availed personal loans which include Housing Loans, Loan against property availed for personal use and Non Residential Property Purchase for personal use. 

  2. CAT 2 borrowers shall include self-employed individuals who have availed loans for business which will include Loan against property with end use of funds for business purpose, lease rental discounting and Non Residential Property purchase for business use.

  3. CAT 3 borrowers will include Self-employed Business entities, not being MSME as at March 31, 2021 who have availed loans for Housing, Loan against property, Lease Rental Discounting or Non-Residential Property Purchase

  4. CAT 4 

    1. Borrowers will include MSME individual and business entities, who have availed loans for Housing, Loan against property, Lease Rental Discounting or Non-Residential Property Purchase

    2. The borrower should be classified as MSME as on March 31, 2021 in terms of the Gazette Notification S.O. 2119 (E) dated June 26, 2020, wherein enterprise holding Udyam Registration Certificate and not having investment in plant and machinery or equipment beyond fifty crore rupees and turnover beyond two hundred and fifty crore rupees

    3. The borrowing entity is GST-registered on the date of implementation of the resolution plan. However, this condition will not apply to MSMEs that are exempt from GST-registration. Exemption limit shall be checked as of March 31, 2021

    4. If the borrower is not registered in the Udyam Registration portal, such registration shall be required to be completed before the date of implementation of the restructuring plan for the plan to be treated as implemented

    5. Accounts provided relief under these instructions shall be subject to subsequent supervisory review with regard to their justifiability on account of the economic fallout from Covid-19

  5. Total outstanding exposure across all lending institutions of the borrower (except for CAT 1) shall not exceed INR 500 million (INR 50 crores) at March 31, 2021. In case of CAT 4 borrowers, the exposure will include non-fund based facilities availed by the borrower.

  6. Borrower account should be standard at March 31, 2021   

  7. The maximum loan amount that can be considered for resolution shall be the outstanding amount at March 31, 2021

  8. Borrower should be impacted on account of economic fallout due to COVID-19 related stress

 

The assessment of the impact on account of COVID-19 related stress and invocation thereof shall be at the discretion of the Company.

2. Borrowers not eligible under Resolution framework

  1. Borrower Accounts that have been rescheduled in terms of para 2(1)(zc)(ii) of the Master Circular – The Housing Finance Companies (NHB) Directions, 2010 after March 1, 2020 shall not be eligible for resolution plan under this guideline,  

  2. Where borrower accounts have already been restructured through implementation under Resolution framework 1.0 or under Restructuring permitted for MSMEs under various restructuring circulars of the RBI, shall not be eligible for fresh resolution under the guidelines laid down for resolution plan 2.0 except as specified in point 6 below 

  3. Facilities extended towards Company employee / staff

  4. The Borrowers are not classified/reported as fraud/ wilful defaulter by the Company and/or other lenders

3. Timeline for Invocation and Implementation

  1. Resolution may be invoked not later than September 30, 2021 

  2. Invocation should be completed within 30 days from the date of application by borrower and the decision on the application shall be communicated in writing to the applicant within 30 days of receipt of such applications

  3. Resolution must be implemented within 90 days from the date of invocation

  4. Date of invocation refers to the date on which both the borrower and the Company have agreed to proceed with a resolution plan)

4. Due-Diligence of borrowers

To ascertain the impact of COVID-19 on borrower accounts, Company shall undertake due-diligence as per the below mentioned framework;

  1. Salaried Borrowers:

    1. Salaried individuals receiving salary either through banking channels or in cash - Impact may be by way salary reduction or job loss. 

      1. In cases of job loss, relieving letter (where available) or undertaking from borrower for loss of job would be taken. Further the qualification & experience will be seen with likelihood of finding new employment in near future

      2. In case of salary reductions, further due-diligence would be done. Salary slip / bank statement in case of bank salaried individual and letter from employer for decrease in salary/salary certificate or customer declaration for cash salaried individual to be collected. Same should be collected for the Pre and Post Covid period

      3. Family / Household income impact due to Covid-19;

        1. Family impact shall include where the salaried individual or any other member of the family has been impacted with COVID-19 related medical illness creating financial stress to meet the medical expenses.

        2. In case, there has been death of the income earning member on account of COVID, resolution plan shall be subject to viability for serving the loan, considering availability of other source of income commensurate with the obligation under the loan account

Resolution plan may be provided where borrower is impacted by any of the aforementioned reason

 

Job Loss (Yes / No)


Salary Reduction (Yes / No)

Family / Household income impact (Yes / No)

Further employability in case of job loss 

Final Decision (Eligible / Not Eligible)

Any one is Yes

Yes

Eligible

Any one is Yes

No

Not Eligible

All are No

Not Applicable

Not Eligible

2. Self Employed Business (Individuals / Entities / MSMEs)

Impact of Business can be on account of the below mentioned factors which will be assessed by Company by doing Personal Discussion and collecting supporting documents. The illustrative supporting documents could be bank statement / financials / GST returns / Declaration from customer / Kacha records of the business, Medical bills or reports for COVID -19 related illness.

 

1. Impact on business due to government restrictions;

  1. Impact due to full or partial lockdown

The impact may be in terms of reduction in footfall, on account of increased use of digital platforms in times of COVID.

 

2. Impact on Business Resources / Cycle;

  1. The business may be impacted due to impact on Supply or Distribution channels

  2. There may be delay in receipt of payment from Debtors leading to working capital stress

  3. The manpower connected with the business could be impacted due to medical reasons or restriction on movement of people.

 

3. Family / Household income impact due to Covid-19;

  1. Family impact shall include where the individual or any other member of the family has been impacted with COVID-19 related medical illness creating financial stress to meet the medical expenses

  2. In case, there has been death of the income earning member on account of COVID, resolution plan shall be subject to viability for serving the loan, considering availability of other source of income that commensurate with the obligation under the loan accounts

 

4. Business Viability

  1. Company would assess whether the business is still viable considering the impact and can resume normalcy in near to mid term

  2. Company would also consider the impact of COVID on the industry in which borrower is operating

 

Resolution plan may be provided where borrower is impacted by any of the aforementioned reasons

 

 

Impact on business due to government restrictions; (Yes / No)

Impact on Business Resources / Cycle; (Yes / No)

Family / Household income impact (Yes / No)

Business Viability ( Yes / No)

Final Decision (Eligible / Not Eligible)

Any one is Yes

Yes

Eligible

Any one is Yes

No

Not Eligible

All are No

Yes

Not Eligible

  • Below are the indicative list of documents that would be required from Customer along with application;

Borrower Type

Document list for pre and post COVID period

Salaried

Salary Slip / Salary Certificate / Letter from Employer (if Cash Salaried)  / Bank Statement / Relieving Letter / Undertaking for Job Loss or Salary reduction

Self Employed (Non-MSME)

Last year Financials / Bank Statement / GST Return / Customer Declaration

Self Employed (MSME)

Last year Financials / Bank Statement / GST Return / Customer Declaration along with GST Registration Certificate and Udyam Registration Certificate

  • Customer to provide medical bills or COVID-19 positive report of customer / family member, where there is financial impact due to COVID-19 related medical emergencies 

  • Company may call for such additional information or documents from customer, as may be required to assess the impact on borrower. to establish 

  • The assessment of the impact on account of COVID-19 related stress and invocation thereof shall be at the discretion of the Company.

5. Available Resolutions under Resolution framework 2.0

  1. The resolution plans implemented under this window may inter alia include rescheduling of payments, conversion of any interest accrued or to be accrued into another credit facility, granting of moratorium etc. based on an assessment of income streams of the borrower. However, compromise settlements are not permitted as a resolution plan for this purpose. 

  2. The moratorium period, if granted, may be for a maximum of two years, and shall come into force immediately upon implementation of the resolution plan. The extension of the residual tenor of the loan facilities may also be granted to borrowers, with or without payment moratorium. 

  3. The overall cap on extension of residual tenor, inclusive of moratorium period if any permitted, shall be two years

6. Borrower accounts restructured under Resolution framework 1.0 (applicable for CAT 1,2 and 3)

  1. In case of CAT 1, CAT 2 and CAT 3 borrowers, where resolution provided under resolution plan 1.0, led to no moratorium being offered or moratorium offered for less than two years and / or residual tenor being extended for less than 2 years, the same may extended subject to the residual tenor not exceeding beyond 2 years in comparison to the residual tenor prior to the implementation of resolution under resolution plan 1.0 subject to consequent changes necessary in the terms of the loan for implementing such extension.

  2. Timelines as mentioned above in point 3 would be applicable

7. Customer grievance redressal

Existing grievance redressal Mechanism would be applicable to address customer grievance, queries and update w.r.t. Resolution framework 2.0

 

8. Asset Classification and Disclosures

Company shall undertake asset classification in accordance to the RBI directors in the above circulars and IRAC norms applicable to the Company along with the disclosure requirements