Loan Restructuring Scheme
To address the economic fallout and the resultant financial stress caused by long periods of lockdowns due to COVID 19 pandemic, RBI has issued a circular providing the banks and lending institutions a framework under which loans given to individuals for personal consumption and entities for their business needs can be restructured. This will be applicable only for individuals and entities that have been impacted due to the COVID-19 pandemic.
FREQUENTLY ASKED QUESTIONS
1. Are all customers eligible for restructuring?
Customers meeting below mentioned criteria will be eligible for restructuring as per RBI circular under Resolution Framework 2.0
a) Individuals and Small Businesses -
(i) Individuals who have availed loan for personal purpose
(ii) Individuals who have availed of loans and advances for business purposes and to whom the lending institutions have aggregate exposure of not more than INR 25 Crores as on March 31, 2021.
(iii) Small businesses, including those engaged in retail and wholesale trade, other than those classified as micro, small and medium enterprises as on March 31, 2021, and to whom the lending institutions have aggregate exposure of not more than INR 25 Crores as on March 31, 2021.
(iv) Credit facilities / investment exposure to the borrower was classified as Standard by the lending institution as on March 31, 2021
b) Entities (MSME segment) – Should have been classified as Standard as on March 31, 2021 and should also fulfill the following criteria
(i) Self Employed customer segment who qualifies the below mentioned MSME norms.
(ii) The borrower should be classified as a micro, small or medium enterprise as on March 31, 2021 in terms of the Gazette Notification S.O. 2119 (E) dated June 26, 2020
(iii) Udyam registration document will be required for MSME classification
(iv) The aggregate exposure, including non-fund based facilities, of banks and NBFCs to the borrower does not exceed INR 25 Crores as on March 31, 2021.
(v) The borrower’s account was a ‘standard asset’ as on March 31, 2021.
(vi) The borrowing entity is GST-registered on the date of implementation of the restructuring. However, this condition will not apply to MSMEs that are exempt from GST-registration. This shall be determined on the basis of exemption limit obtaining as on March 31, 2021.
(vii) The borrower’s account was not restructured under previous MSME restructuring circulars
Udyam portal link: https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm
2. What loans will qualify under the definition of “Personal purpose”?
In terms of RBI circular DBR.No.BP.BC.99/08.13.100/2017-18 dated January 4, 2018
Personal loans refer to loans given to individuals and consist of (a) consumer credit, (b) education loan, (c) loans given for creation/ enhancement of immovable assets (e.g., housing, etc.), and (d) loans given for investment in financial assets (shares, debentures, etc.).
Consumer Credit as defined above refers to the loans given to individuals, which consists of (a) loans for consumer durables, (b) credit card receivables, (c) auto loans (other than loans for commercial use), (d) personal loans secured by gold, gold jewellery, immovable property, fixed deposits (including FCNR(B)), shares and bonds, etc., (other than for business / commercial purposes), (e) personal loans to professionals (excluding loans for business purposes), and (f) loans given for other consumptions purposes (e.g., social ceremonies, etc.).
However, it excludes (a) education loans, (b) loans given for creation/ enhancement of immovable assets (e.g., housing, etc.), (c) loans given for investment in financial assets (shares, debentures, etc.), and (d) consumption loans given to farmers under KCC.
3. Am I eligible for restructuring if I have taken loan after March 31, 2021 and affected by pandemic?
No, only those loans which were availed on or before March 31, 2021 and affected by pandemic will be eligible for restructuring.
4. Am I eligible for restructuring if I have taken personal loan restructuring under resolution framework 1.0?
Yes, if you have availed restructuring 1.0 under personal loan restructuring. The tenor extension under restructuring 1.0 should be less than 24 months. Cumulative tenor extension under restructuring 1.0 and 2.0 should not exceed 24 months.
Example |
Scenario - 1 |
Scenario – 2 |
Scenario – 3 |
Product |
Two-Wheeler |
Personal Loan |
Home Loan |
Restructured under Resolution Framework 1.0 |
Yes |
Yes |
Yes |
Balance Tenor prior to restructuring 2.0 (A) |
30 months |
28 months |
200 months |
Additional Tenor provided during restructuring 1.0 included in (A): (B) |
12 months |
18 months |
24 months |
Additional Tenor Allowed under restructuring 2.0 (24 months less (B)): (C) |
24 less 12 i.e. 12 months |
24 less 18 i.e. 6 months |
24 less 24 i.e. No Tenor Extension Allowed |
Total Tenor Post restructuring 2.0 (A) + (C) |
30 + 12 i.e. 42 months |
28 + 6 i.e. 34 months |
200 + 0 i.e. 200 months |
5. Am I eligible for restructuring if I have taken MSME loan restructuring under resolution framework 1.0?
No, you are not eligible for restructuring if you have availed restructuring 1.0 under MSME loan restructuring
6. How do I avail the restructuring benefit on my loan?
Please visit the bank’s website https://capitalfirst.com/customer-loan-restructuring and fill up the application form. You would also have to provide the associated documents and declarations as mentioned in the application form.
Wholesale and Business Banking customers are requested to reach out to their respective Relationship Managers for details.
7. What all documents do I need to submit to avail the benefit?
The bank may require you to submit the following documents pertaining to your employment and business to determine the financial stress
a. Salaried Customers – Salary slips and bank statements
b. Self-employed Customers - Bank statement, GST returns, Income tax returns, Udyam registration document (for MSME) etc.
These requirements may vary depending on the kind of loan availed and loan outstanding. You may visit the bank’s website for further details
8. I don’t have Udyam Registration document, can I apply for restructuring under MSME?
You have to register in the Udyam registration portal. Such registration shall be required to be completed before applying and proof of registration to be submitted
9. What will be the eligibility criteria for restructuring?
a) The customer who wish to apply for restructuring must have been impacted financially by the lockdowns due to COVID-19 pandemic in the form of reduction / loss of income which can be substantiated through
i. Reduction / suspension in salary
ii. Job loss.
iii. Closure of Business /Reduced business volumes
b) The application for restructuring will be reviewed by the bank based on documents / information provided at the time of restructuring, detailed due diligence on viability of customer cash flows, responses provided by customer and repayment behavior of the customer in recent past
10. What are the restructuring options that are available to me?
Restructuring options will be available on login portal. Exact tenor and EMI will be decided based on assessment by the bank.
11. Whether there will be any change in EMI?
Yes, the tenure and EMI will be recalculated and advised to you during the restructuring process.
12. Will there be any processing fees or charges if I restructure my loan?
The bank may levy a fee of 0.35% for loans above INR 10Lakhs for restructuring a loan.
13. Will there be any change in rate of interest charged to my loan?
The bank may charge additional interest of 0.50% for loans above INR 10Lakhs in the form of risk premium over and above the current rate of interest for the remaining tenure of the loan.
14. I hold multiple loans/credit facilities with the bank. Do I have to apply separately for each of these loans?
Yes, customers must apply separately for each loan.
15. Will opting for the restructuring package have an impact on my credit bureau report?
Yes. This would have an impact on your credit standing. As per the regulatory guidelines advised by RBI, your loan/credit facility will be reported to the credit bureau.
16. I have not availed moratorium. Can I apply for restructuring?
All customers of the bank are eligible for restructuring irrespective of the moratorium applied (from Mar – 20 to Aug – 20) status subject to the borrower meeting the bank’s approved restructuring policy and the regulatory guidelines for restructuring.
17. Up to what date can I apply for relief under the framework?
The last date to apply for relief under the framework is September 24, 2021.
18. My loan was taken along with a co-borrower/s. Do I require their consent for restructuring?
All borrowers/co-borrowers of the original loan need to agree and sign on any changes in the loan structure including the restructuring agreement.
19. Can I apply for additional loan under this framework?
No, additional loans are not allowed under this framework.
20. My account is Standard as on March 31, 2021 but slipped to NPA subsequently will I be eligible?
Yes, standard accounts as of March 31, 2021 are allowed for restructuring irrespective of subsequent status.
21. My account was classified as NPA on March 31, 2021 but subsequently upgraded as I paid off overdue amount. Am I eligible for restructuring?
No, NPA accounts as of March 31, 2021 are not allowed for restructuring irrespective of subsequent status.
22. What type of borrower(s) / credit facility(ies) are not eligible for restructuring (Personal & small businesses Category)?
The following type of borrower(s) / credit facility(ies) are not eligible for restructuring under RBI’s Resolution Framework:
a. Farm credit as listed in Paragraph 6.1 of Master Direction FIDD.CO.Plan.1/04.09.01/2016-17 dated July 7, 2016 (as updated) or other relevant instructions as applicable to specific category of lending institutions.
b. Loans to Primary Agricultural Credit Societies (PACS), Farmers' Service Societies (FSS) and Large sized Adivasi Multi-Purpose Societies (LAMPS) for on-lending to agriculture.
c. Exposures of lending institutions to financial service providers. Financial service providers shall have the same meaning as in sub-section (17) of Section 3 of the Insolvency and Bankruptcy Act, 2016.
d. Exposures of lending institutions to Central and State Governments; Local Government bodies (e.g. Municipal Corporations); and, body corporates established by an Act of Parliament or State Legislature.
e. MSME borrowers whose aggregate exposure to lending institutions collectively, is INR 25 Crores or less as on March 31, 2021.
f. Credit facilities provided by lending institutions to their own personnel/staff
23. I am not an MSME, am I eligible for restructuring of loan?
Small Businesses including those engaged in wholesale and retail trade, other than those classified as MSME, are eligible for application for restructuring, provided the lending institutions have an aggregate exposure not exceeding INR 25 Crores as on March 31, 2021 to these individuals / entities.
24. Are JLG loans eligible for resolution plan under the Resolution Framework?
a. JLG Loan for Agri Allied activities like dairy, fishery, animal husbandry, poultry, bee-keeping and sericulture, then it will be allowed to be restructured under the resolution framework.
b. JLG Loans for Farm Credit like KCC, Pre and Post Harvest activities, Loan against Hypothecation of Crop Produce: Not eligible.
c. JLG Loans for other than Point a & b above: Will be allowed to be restructured under the resolution framework depending on the end use of the loan.
Note: Wholesale and Business Banking customers are requested to reach out to their respective Relationship Managers for details.