Retail customers yet to approach us in big numbers for loan recast: SBI MD

SBI has launched a portal for retail customers to check eligibility for personal loan restructuring

The country’s largest lender, State Bank of India (SBI), has, so far, not seen its retail customers approach the bank in big numbers to avail the restructuring facility, which the Reserve Bank of India (RBI) has made available for personal loans, apart from corporate loans.

“People are yet to approach in a big number. We have not heard from any of our branches that a large number of people have approached them for restructuring,” said Challa Sreenivasulu Setty, managing director, SBI.

The assumption is that people who availed the six months moratorium, which the RBI had asked banks to offer due to the coronavirus (Covid-19) pandemic, will also opt for the restructuring facility in the personal loan segment.

“If you see our moratorium numbers, they are minuscule. It was just 9 per cent, so this is the universe, probably, which will look to avail the restructuring facility. But some of the customers who had availed the moratorium have started paying. Our assumption is, people who have not opted for moratorium in the first place, will not utilise this facility," Setty said.

 

SBI on Monday launched a portal, which will enable retail customers to check if their loans are eligible for restructuring. The portal will also allow customers to check the quantum of moratorium they can seek, and how much rescheduling needs to be done in their repayment tenure.

According to RBI guidelines, any customer who is seeking restructuring, ought to have been impacted by the pandemic. Hence, for that purpose, customers, who wish to avail the facility, need to furnish their income prior to the Covid-19 pandemic (in February) and what they are currently earning. If there is a reduction in income due to job losses or any other factor, that has to be provided to the bank. Furthermore, the customer also needs to apprise the bank of a timeline when he/she expects to return to normalcy, in terms of income. A self-assessment has to be done by the customer on what will be his/her expected income and when, so that the moratorium can be accordingly structured.

“The expected net monthly income will determine for how many months the customer can avail the moratorium facility”, Setty said.

So far, around 3,500 people have accessed the portal, and out of them 111 people were eligible. Now, they will have to go the branches and complete the rest of the process. However, this is not the only channel to apply for restructuring. Customers can visit the branches and apply for restructuring.

“People want moratorium, extension in repayment schedule, and in some cases, they might opt for an EMI readjustment. In case customers are not eligible under this scheme, then there are other options available to them such as the top up home loan, where we are offering a moratorium to provide relief to the customers,” Setty said.  

Moreover, customers who opt for this facility, will be required to pay additional interest of 0.35 per cent per anum over and above their current pricing for the remaining tenure of the loan, in order to offset partial cost of additional provisions required to be made by the bank. Furthermore, interest will accrue in the moratorium period.

 

SBI is of the view that customers who have utilised the facility, should not face a revision in their credit score. However, the issue under consideration at the moment.

In order to provide relief to retail borrowers, the RBI lent a helping hand by allowing a first-of-its-kind debt restructuring for personal loans. Under the scheme, a resolution plan for personal loans may be invoked till December 31 and will be implemented within 90 days thereafter. Borrowers, whose accounts are classified as standard, but are not in default for more than 30 days as of March 31, will be eligible for restructuring.

According to the RBI guidelines, lenders may reschedule payments of the borrower, convert the interest accrued or interest that will accrue into another credit facility. Furthermore, the plan may entail granting of a moratorium to borrowers, based on assessment of income streams of the borrower, subject to a maximum of two years, and the loan tenor can be modified accordingly. The moratorium period, if granted, will come into force immediately upon implementation of the resolution plan.