The COVID-19 moratorium on ICICI Bank personal loans ended in September and all borrowers were required to start making monthly EMI payments starting in October 2020. However, not all borrowers with outstanding loans are in a position to start making the regular payments as many have been impacted by the pandemic leading to reduced income, job loss, cash flow problems in business, etc.
In order to reduce the repayment burden on these borrowers, ICICI Bank has introduced the RBI approved COVID-19 personal loan restructuring mechanism. 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 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:
- Changes made to the number of EMIs payable/repayment amount
- Roll over option of credit facilities
- Sanctioning of additional credit
- Conversion of incurred of accrued interest (or future accrued interest) into a separate loan account
- Granting moratorium in addition of earlier COVID-19 loan moratorium for a period not exceeding 2 years
The above list of options is indicative in nature and ICICI Bank 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.
The key eligibility criteria to avail ICICI Bank’s loan restructuring facility include the following:
- Loan account must have been opened before March 1, 2020
- As of 1st March, 2020 the loan account was classified as “standard” with a default period of less than 30 days
- The loan account has been designated as “standard” up to the date on which the borrower and ICICI Bank agreed to the loan resolution plan (i.e. date of invocation)
- The borrower has proven 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.
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:
- Latest salary slip from January 2020 onwards
- Updated account statement showing salary credit from January 2020 onwards
- Proof of job loss such as discharge letter/termination letter (if applicable)
- Self-declaration of applicant stating current unemployment (if applicable)
- Business bank account statement for past 12 months along with applicable income documents
- GST Returns for H1 FY2020 and H1 FY2021
In case of online application, these documents need to be uploaded to the ICICI official website along with the online form. Alternately 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
The application for ICICI Bank’s personal loan restructuring has to be submitted by 18th December 2020.
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 approved my loan restructuring application?
Ans. Typically ICICI Bank will let you know their decision to approve or reject your loan restructuring application within 10 working 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.