When the coronavirus pandemic showed up its ugly head in the country a nationwide lockdown was imposed. In the lockdown, The Reserve Bank of India announced that the EMI payment could be deferred as operations were suspended.
And now the deferment has been extended for retail home loan borrowers after August 31.
Read on to find out all the details!
Loan Borrowers With Job Losses And Pay Cuts To Get EMI Deferment
Those who have a retail home loan but have suffered pay cuts or job losses during the lockdown will be given another EMI deferment post August 31, which was the end date of the moratorium granted by the RBI.
As per new reports coming in, this is a part of loan restructuring; many of the banks including SBI are planning to offer restructuring options for home loans. However, this restructuring will be for those cases where the overall tenure for the loan is not more than two years after relaxing the repayment schedule.
The banks might allow the deferment of EMI for a few months in cases where the borrower has suffered a total loss of income. Whereas for others, banks might offer some other options such as step-up EMIs, with a lower payout across a couple of years which will help them compensate for the reduction in salary.
Sources have revealed that the bank who are considering loan restructuring will be coming up with their own proposals that will be submitted to their respective boards by the beginning of the next month. Prior to this, they will be identifying the number of borrowers of home loans who are undergoing such stress.
In addition to that, banks have also asked the RBI to permit a one-time restructuring of loans because they don’t want to categorize defaulters as non-performing loans. Also, the banks don’t want to employ any security or attach assets during this period of the pandemic.
Banks Will Not Offer Best Rates to Restructured Loans
Additionally, the banks have clearly stated that they will not be capable to offer their best rates to the restructured loans as an additional provision of 10% has already been made. The restructured loans borrowers might have to pay up to 30 basis points higher interest.
The committee appointed by the RBI will be submitting its report by mid September. This report will analyze various parameters for restructuring which will include the maximum debt-equity ratio to be allowed, the permissible leverage for each sector like hospitality, aviation, real estate, or construction.
The circumstances under which debt to equity conversion will be allowed will also be decided by the committee. The committee will also review every individual corporate loan with bank exposure over rupees 1500 crores for restructuring.