SBI Personal Loan Restructuring: How To Apply? Extra Interest? Documents Needed? (Full Details)

The country’s largest lender, SBI, has now detailed the processes and rules that will be followed for restructuring personal loans.

As allowed by the Reserve Bank of India, the State Bank of India has now commenced an exercise to restructure personal loans. 

How to check if you are eligible? Which loans will be covered under the new framework? Read on to find out all the details about the restructuring of loans right here!

SBI To Restructure Personal Loans: You Will Be Required To Pay 35% More Than Current Pricing

The SBI has also created a website that will enable users to check their eligibility and also upload any relevant documents which will be followed by scrutiny and the approval of the officials at branch level. 

The bank will be analyzing the applications after verifying if the borrowers have lost their jobs all had a reduction in the income resulting from the COVID-19 pandemic. If the customers are successfully e verified then they will be eligible for the extension of their loan which will also result in a change in their EMIs.

However, there is a catch.

As per SBI, the customers will be required to pay an additional interest of 0.35% annually over and above current pricing for the remainder of their loan terms. 

As per reports the bank has not yet received a very large number of requests for or personal loan structuring for which the SBI is magnifying the outreach so that borrowers will approach the bank sooner or later to avail of this scheme. This was confirmed by CS Setty, managing director at SBI

About the effect that the restructuring of personal loans will have on a borrower’s credit score, Setty said, “I can’t comment on whether credit scores would be impacted. It is a very peculiar situation. Our view is that it should not be impacted.”

The primary intention behind the restructuring of the loans is to help the people who have been affected by the job loss or pay cuts that were introduced in the lockdown imposed due to the COVID-19 pandemic.

Who Is Eligible For The New Framework? 

A loan borrower will be considered affected by this pandemic only if these conditions are met: 

1. Salary or income in August 2020 reduced as compared to February 2020.
2. Reduction or suspension in salary in the duration of the lockdown.
3. Job loss or business closure.
4. Closure during lockdown/reduced activity of units/shops/business establishments in case of self-employed/professionals/businessmen.

Which Loans Will Be Covered In The New Framework?

Housing and other related loans, Education loans, Auto loans (other than loans for commercial use), Personal loans will be covered under the newly designed framework by the SBI.

Additionally, not all the above loans will be eligible under this framework. The following eligibility conditions will need to be met to the eligible for this:

1. Firstly your loan should be a “standard account” as mentioned on the date of application for relief under this framework. It should also have been “standard” and not in default for more than 30 days as of 1 March 2020
2. You should be affected by the COVID-19 pandemic and the lockdown by meeting the criteria stated above to avail of this new framework.

Which Documents Will Be Required? 

While applying online, you will be required to upload the copies of the following documents; if you are going the offline mode, you will have to submit the copies of the following with the application form.

1. SBI will need your salary slips for February 2020 and the current salary slips for gauging the exact need.
2. In case you are availing loan moratorium for 24 months, then SBI will need your estimated earnings, when the loan moratorium ends.
3. In case of job loss, you will need to show exit letter or letter of discharge
4. The details of your salary, by showing the bank statements. Only those bank statements, where your salary is credited. In the case of busniess, SME, the statemens of the operating account of the bank where your business transactions take place. This is needed for period February 2020 till 15 days prior to submission of application.
   
5. Declaration by self-employed professionals/ businessmen declaring that their business is affected by Covid-19

How To Apply For The New Framework?

Simply log in to the bank’s website, www.sbi.co.in. You will be sent an OTP on your registered mobile number to verify your account.

You can also visit your home branch of SBI and submit the application along with the above-mentioned documents there.

The last date to apply for relief under the framework is 24 December 2020.

Your application will be processed within 7 to 10 working days from the date of submitting the same.

You can also apply for relief under this framework in more than one account; however, you will not be eligible for any additional loan facilities under the new framework.  

What Relaxations Will Be Offered? 

Under the new framework, the bank offers a moratorium of up to a maximum of 24 months. Also, rescheduling of the instalments and extension of tenure by a period equivalent to the moratorium offered will be subject to a maximum of 2 years.

There will be a change in the EMI as the tenure of your loan will be extended by the period of the moratorium. Therefore, the EMI that should be paid will be recalculated and conveyed to you.