Due to the resurgence of the Covid-19 pandemic, the RBI has released the Resolution Framework 2.0 on 5 May, 2021, to lenders including banks and financial institutions to offer resolution plans to help minimize the financial stress of the borrowers. As per RBI guidelines, ICICI Bank is now offering the option of personal loan restructuring to eligible borrowers who have been impacted by the pandemic. You should however keep in mind that this restructuring option should be considered only as a last resort and you should continue making your regular EMI payments if you are able to do so.
What is Loan Restructuring?
Loan restructuring is the process by which ICICI Bank will provide relief to borrowers whose financial situation has been adversely impacted by the resurgence of the COVID-19 pandemic and they are unable to pay their due EMIs in a timely manner. The current restructuring framework can offer relief to borrowers of personal loans in the following ways:
- Moratorium and/or extension of remaining loan tenure up to a maximum of 24 months
- Re-assessment of working capital
- Rescheduling of payments including step up EMI/balloon repayment/bullet repayment
- Conversion of accrued interest (or future accrued interest) into a separate loan account with a tenure of up to 2 years
- Conversion of a portion of the debt into equity or other marketable, nonconvertible debt securities issued by the borrower
The above list of options is indicative in nature and ICICI Bank after assessing the impact of the financial stress on the borrower, may at its discretion apply one of the above methods or a different method to provide relief to eligible borrowers on a case-by-case basis.
Eligibility Criteria
The key eligibility criteria to avail ICICI Bank’s loan restructuring facility include the following:
- Individuals who have availed a personal loan. Personal loans include consumer credit (credit card outstanding, education loans, loans given for creation or enhancement of immovable assets) and loans given for investment in financial assets (debentures, shares, etc.)
- Individuals who have availed loans for business use as well as entities engaged in small businesses, except for those classified as MSMEs. However, their aggregate exposure should not exceed Rs. 50 crore from all lending institutions as on 31 March, 2021.
- The loan account must be classified as “standard” as on 31 March, 2021. This means the account of the borrower must not be in arrears/overdue for more than 90 days as on Mar 31, 2021.
- The borrower needs to prove financial distress such as reduced income, salary deferment, job loss, business closure, etc. resulting from the COVID-19 pandemic
ICICI Bank may require applicants to meet additional eligibility criteria on a case by case basis at its discretion.
Documents Required
In order to apply for ICICI Bank’s COVID-19 loan resolution program, the applicant needs to submit some key documents depending on whether they are salaried or self-employed applicants:
For Salaried
- Last 6 months’ salary slips, i.e., from 1 December, 2020 onwards
- Bank account statements from 1 October, 2020 till date of application
- Communication of layoff from the employer (in case applicable)
- Income statements showing family income for financial year 2019 – 2020
- Any other document ICICI Bank may require on case to case basis for the purpose of identification of Covid-19 related stress
- Personal discussion between the borrower and ICICI Bank
For Self-Employed
- Bank statements for all accounts from 1 October, 2020 till date of application
- GST Returns for the previous 12 months preceding the date of application
- Last audited provisional and/or projected financials
- Income statements showing family income for financial year 2019 – 2020
- Any other document ICICI Bank may require on case to case basis for the purpose of identification of Covid-19 related stress
- Personal discussion between the borrower and ICICI Bank
In case of online application, these documents need to be uploaded to the ICICI official website along with the online form. Alternatively, you can apply in-person with self-attested documents and a completely filled out paper form at a loan servicing branch of ICICI Bank.
How to Apply
Those interested in opting for personal loan restructuring with ICICI Bank can apply in the following ways:
- Online application submitted through the official website of ICICI Bank
- Offline application submitted at a loan servicing branch of ICICI Bank. Alternatively, you can also contact your relationship manager.
The application for ICICI Bank’s personal loan restructuring has to be submitted by 16 September, 2021.
FAQs
Q1. Can I get my outstanding personal loan restructured more than once if the first attempt does not work?
Ans. No. The restructuring facility offered by ICICI Bank is a one-time benefit and you can opt for it only once.
Q2. Is restructuring of my ICICI Bank personal loan mandatory?
Ans. No. The restructuring facility is optional and available to those facing financial distress due to the COVID-19 pandemic. You should continue paying your regular EMIs as per the loan schedule if you can afford to do so.
Q3. Will I have to pay additional interest charges if my restructuring application is accepted?
Ans. Yes, additional interest charges as per applicable personal loan interest rate will be payable to ICICI Bank in case you opt for restructuring of your loan.
Q4. How quickly will ICICI Bank approve my loan restructuring application?
Ans. Typically ICICI Bank will let you know their decision to approve or reject your loan restructuring application via SMS/email within 30 days of receiving the application along with all supporting documents. However, do keep in mind that timely submission of your application does not guarantee acceptance of your restructuring request by ICICI Bank.
Q5. Will my loan status on credit report be affected if I opt for loan restructuring?
Ans. Yes, if you get your ICICI Bank personal loan restructured, the status of the loan as shown on your credit report will change to “restructured”. However, how this new status will impact your credit score or CIBIL score will depend on the criteria set by the individual credit bureau.
Q6. Is it possible to apply for restructuring of multiple loans that I have with ICICI Bank?
Yes, you can apply for restructuring of multiple loans with ICICI Bank.
Q7. I had availed the restructuring facility under Resolution Framework 1.0. Can I apply again under Resolution Framework 2.0?
Yes, you can apply for loan restructuring under Resolution Framework 2.0. However, as part of the Resolution Framework 2.0, ICICI Bank may increase the moratorium period and/or extend the remaining tenure to an extent that the total period covered under Resolution Framework 1.0 and 2.0 does not exceed two years.
