On 5 May, 2021, the RBI announced the Resolution Framework 2.0 to help minimize the potential financial stress of small businesses, MSMEs and individual borrowers due to the resurgence of the COVID-19 pandemic. As mandated by RBI, HDFC Bank is now offering Restructuring 2.0 on personal loans besides other loans to eligible borrowers to help mitigate the financial stress resulting from the economic fallout due to the Covid-19 pandemic. However, 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. Read on to find out more about its eligibility criteria, documentation requirement and application process, etc.
What is Loan Restructuring 2.0?
HDFC Bank’s RBI-mandated loan restructuring framework is designed to provide relief to borrowers who have been financially impacted by the resurgence of 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:
- Individuals and Entities should be classified as Standard with the bank as on 1 April, 2021.
- The applicant should be financially impacted by the Covid-19 pandemic, that is, there should be a reduction or loss of income or cash flows
- The applicant’s account(s) should be on the bank’s book as on 1 April, 2021
- Minimum loan amount outstanding to qualify is Rs. 25,000
Note: Before granting the restructuring,the bank will review the reduction of income and its financial impact on the customer on the basis of the information/ documents provided which does show the fall in cash flow due to the Covid-19 pandemic. The viability of the customer to pay the restructured EMIs shall also be assessed on the basis of the documents provided. Besides the customer’s repayment track record, credit bureau records as well as the responses given by the customer while availing moratorium earlier will also be taken into consideration when making the restructuring decision.
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 last 2 months and for March 2021
- Applicant’s declaration regarding estimated salary/income immediately after the end of the desired restructuring 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 Oct 2020 to 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/ CC account bank statement from 1st April, 2020 till date
- GST returns from October 2020 till date
- Income Tax Returns (ITR) for FY 2019, FY 2020 and FY 2021 (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 September 2021.
Q1. If I get my loan restructured, will it show up on my credit report?
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?
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?
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?
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?
HDFC Bank will typically inform applicants regarding acceptance or rejection of their COVID-19 loan restructuring application within 10 to 14 days.
Q6. I was not able to apply for moratorium earlier. Can I apply for restructuring now?
Yes, the restructuring scheme is open to all customers of the bank whether they applied for the moratorium or not subject to the borrower meeting the regulatory guidelines of restructuring.
Q7. I had availed restructuring earlier. Can I avail it once again?
In case you have already availed restructuring earlier, you are not eligible for restructuring 2.0. However, in case you have not availed of the full benefit of 24 month tenure extension under the earlier scheme which ended on 31 December, the bank can evaluate and provide relief to the extent of overall tenure extension of 24 months.