Mumbai: Other borrowers, including the State Bank of India (SBI), are looking for alternatives for home loan restructuring so that the total tenure of the loan does not increase by more than 2 years even after giving relief to the repair schedule. There is also an option to extend the EMI for those customers, whose income is completely closed or not enough in the midst of the current crisis. Banks also have an option to reduce the EMI amount for a few years to compensate for the loss at this time. In early August, the Reserve Bank of India (RBI) announced a waiver of the facility of personal loan restructuring while continuing efforts to revive the economy affected by the corona virus. Giving information about this, RBI said that once restructured, such loan will be considered as standard. This means that if the borrower follows the new payment structure, the borrower will not be reported to the credit bureau as a defaulter.
Banks will bring proposals for retail and home loans
The English newspaper Times of India wrote in a report citing sources that the KV Kamath Committee will not look at retail and home loan restructuring. For this, banks will bring their own proposal, which they will have to present before their board. These proposals have to be submitted by the beginning of next month. Banks fear that they may not be converted into non-performing assets (NPAs) over existing debt. This is why banks are showing interest in loan restructuring.
Banks also say that this is not the right time to impose security and seize property. RBI has allowed banks to extend the period up to 2 years. Bankers say that they cannot provide moratorium facility for 2 years.
Compliment of an interest rate for banks too
If someone has taken a loan of 15 years and has got the benefit of 6 months moratorium on it, then the total duration of their loan has already increased for 14 months. The actual discount will depend on what rate the creditor is paying interest. At present, the interest rate on a home loans has come down to 7 percent. In such a situation, banks say that they will not be able to apply their minimum interest rate on restructured loans, because on this they will have to provide 10 percent additional provisioning. This will increase the cost by 30 basis points i.e. 0.30 percent.
Difference between loan moratorium and loan restructuring
The RBI had given an exemption for not paying installments under the loan moratorium. During this time, whatever interest is created, banks add to your principal money. When EMI starts, you will have to pay interest on the entire outstanding amount. That is, interest will also be charged on the moratorium period. In restructuring the loan, banks will be able to decide whether to reduce the EMI or increase the loan period, only to collect interest, or to adjust the interest rate.
Kamath committee report will come by September
The Kamath Committee will submit its report by the middle of September. Bankers hope that this committee will have many criteria for restructuring. Like- Debt-Equity Ratio. This would be a valid criterion for hospitability, aviation, real estate and construction sectors. The committee will also decide under which circumstances the debt-equity ratio can be changed. In addition, every corporate loan will be reviewed by the committee, whose amount is more than Rs 1,500 crore.
