To mitigate the impact of COVID-19 on borrowers, the State Bank of India has recently released loan restructuring option. SBI Card users, who have been affected by coronavirus pandemic, will also be able to apply for loan recast scheme. "This policy is applicable to accounts where the repayment capability has been temporarily impaired due to COVID-19 related stress," the lender said in a statement.
Eligibility: For retail card holders, any COVID-19 stress impacted account shall be considered eligible based on the below criteria ... more...
1) Accounts which were classified as Standard and not in default for more than 30 days on 1st March, 2020
2) The accounts should not be classified as NPA in the preceding 12 months from 1 March, 2020
3) Account should have been enrolled for moratorium between 1 March and 31 August OR not have paid total minimum due at least once during this time
SBI Card shall create a list of accounts eligible for this resolution framework based on assessment of COVID-19 stress at an account level.
The eligibility will be defined at an individual account level and not at a customer level, the bank further added. If a customer has multiple accounts and if only one account meets the above eligibility criteria, then only that account shall be offered the benefits of the framework. The other account shall continue to operate as is with no changes.
Restructuring plan: The plan is the conversion of the existing outstanding balance into a term loan (restructuring) for a period of up to 24 months. The existing interest rate applied for restructured accounts are in the range of 13-19% based on stage of delinquency and selection of tenure between 3 and 24 months.
The resolution must be invoked before December 31, 2020 and has to be implemented within 90 days from the date of invocation for retail accounts and within 180 days for corporate accounts, the bank said.
How it will work: The customer needs to provide auto debit or National Automated Clearing House (NACH) or PDCs (as the case may be) for deduction of the EMIs as per the agreed plan within the timeline to be given by SBI Card.
Credit card status: If customer accepts the EMI Plan, the credit facility extended on the credit card account shall stand deactivated and the SBI Credit Card would be inactive for usage (if not already deactivated). However, the credit facility will be reactivated over 3 to 6 months basis regular EMI repayments.
Impact on Credit score: If the customer opts for restructuring option, it will be reported as ‘restructured’ on the credit report. "The credit reporting in respect of customer where the resolution plan is implemented under this facility shall reflect the 'restructured' status of the account. If the resolution plan involves renegotiations that would be classified as restructuring under the Prudential Framework, the bank said.
"The credit history of the borrowers shall consequently be governed by the respective policies of the credit information companies as applicable to accounts that are restructured," the bank added.
1) This policy is not applicable SBI Card employee accounts
2) Accounts which have been restructured/settled and the necessary letters have been issued in this regard to the customers between March and July shall not be eligible for this program.