As the COVID-19 moratorium on HDFC personal loans ended in September 2020, from October 2020 onwards, regular EMI payments need to be made by borrowers. But, in case the borrower is still unable to start making regular payments at the end of the moratorium period, he/she can seek relief by applying for personal loan restructuring mechanism. As opting for the restructuring plan can increase interest cost of the loan as well as adversely impact the credit score, it is advisable to continue making timely EMI payments if you are able to.
What is loan restructuring?
HDFC Bank’s RBI-mandated loan restructuring framework is designed to provide relief to borrowers who have been adversely affected by the COVID-19 pandemic. The relief offered to borrowers through this RBI-mandated loan restructuring mechanism may include:
- Moratorium on EMI payments for up to a maximum of 24 months
- EMI rescheduling/ loan tenure extension up to maximum 24 months
Restructuring the loan will also involve recalculation of the EMI payable based on the type of relief availed by the borrower.
The key eligibility criteria to avail the HDFC personal loan restructuring facility include the following:
- Reduction in income/salary in August versus February 2020
- Reduction in salary/loss of income during COVID-19 lockdown
- Business closure or job loss
- Reduction in activity/closure of business unit/shop due to the COVID lockdown
- Borrowers who qualified for HDFC COVID-19 loan moratorium previously are also eligible
- Loans designated as “Standard Account” at the time of submitting restructuring application
- No more than 30 days default in loan account as on March 1, 2020
- Applicable to personal loans disbursed before March 1, 2020
- Minimum loan amount outstanding to qualify is Rs. 25,000
Documents Required for Salaried Applicant
Key documents that salaried applicants are required to submit when applying for HDFC Bank’s personal loan restructuring program are as follows:
- Salary Slips for current/latest month and February 2020
- Applicant’s declaration regarding estimated salary/income at the end of the moratorium period up to a maximum of 24 months
- In case of job loss, applicant needs to provide letter of discharge
- Salary account statement showing credit of salary from February 2020 till date
Documents Required for Self-Employed Applicant
Key documents that self-employed applicants are required to submit when applying for HDFC Bank’s personal loan restructuring program are as follows:
- Current account bank statement from 1st October 2019 to 30th September 2020
- GST returns from October 2019 to September 2020
- Income Tax Returns (ITR) for FY 2019 to FY 2020 (for those who have filed)
- Balance Sheet/Profit & Loss statement for the previous 2 years
- Udyam certificate
- Self-declaration by applicant that business has been adversely impacted by COVID-19
How to Apply
Borrowers interested in applying for HDFC Bank’s loan restructuring framework can do so in the following ways:
- Online application submitted through the HDFC official website
- Through your HDFC Bank relationship manager
The application for HDFC personal loan restructuring has to be submitted by 20th December 2020.
Q1. If I get my loan restructured will it show up on my credit report?
Ans. Yes, if your loan is restructured, the status of the restructured loan will be reported to all credit bureaus as “restructured”. However, the impact of this change on your credit score will vary based on the scoring algorithm used by the relevant bureau.
Q2. How many times can I apply for restructuring of my loan?
Ans. The COVID-19 loan restructuring offered by HDFC bank is a one-time benefit available to eligible borrowers. Hence you can only apply for it once.
Q3. I have 2 outstanding loans with HDFC Bank. Can I apply for restructuring of both these loans at the same time?
Ans. The HDFC loan restructuring application form will allow you to choose either one or both of your outstanding loans for restructuring. This option of choosing multiple/single loan restructuring is also applicable to those with 3 or more outstanding loans with HDFC Bank.
Q4. What is the minimum outstanding amount to apply for personal loan restructuring (COVID-19) with HDFC Bank?
Ans. HDFC Bank has mandated that a key eligibility criteria for personal loan restructuring is that the outstanding amount at the time of application is Rs. 25,000 or higher.
Q5. When will I know whether my HDFC personal loan restructuring application is accepted or not?
Ans. HDFC Bank will typically inform applicants regarding acceptance or rejection of their COVID-19 loan restructuring application within 10 to 14 days.