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State Bank of India kicks off restructuring of retail loans

MUMBAI: State Bank of India (SBI), the country’s largest bank has kicked off its due diligence for restructuring of retail loans by announcing a two step process to which includes allowing customers to check their eligibility for restructuring through its website.

Customers have to enter their loan account number, income pre Covid, current income and also expected income in the near term for the bank to assess whether they are eligible. They will be given a reference number valid for 30 days to visit the bank’s branches and chalk out a restructuring plan.

“Instead of people coming to branches to check whether they qualify they can just check on the website. For a loan to be eligible we will need to ascertain that Covid has had an impact on the customers income and we will also have to get some confidence that he or she will be able to repay in the future,” said CS Setty, managing director, retail and digital banking at SBI.

If a customer says that his income now is higher than or equal to pre Covid times he automatically does not qualify for the restructuring. Also if a customer does not expect his income to rise or in case of a job loss find a job in the near future, it will be difficult to restructure the loan, Setty said.

So far this month 3500 customers have checked their eligibility out of which about 3% have been found to be qualified for restructuring, the bank said.

A loan tenure can be increased by a maximum of 2 years if a borrower does not want to increase his or her EMI according to RBI guidelines.

SBI said that the restructuring process will be complete after verification of documents and execution of documents at branches. Documents include old and revised salary slips in case of salaried people and income or profit and loss statement in case of the self employed.

Banks have time till December to complete the process of identifying loans for restructuring.

Under the RBI mandated framework, borrowers whose loan accounts were classified as standard and not default for equal to or more than 30 days as on March 1, 2020, and their incomes are impacted by COVID-19 qualify for restructuring.

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