Taken personal loan? Worried over paying? RBI’s new plan will reduce your distress

In order to reduce the people’s distress during the crisis, the Reserve Bank of India has brought a one-time loan restructuring scheme. People will also get the benefit of this personal loan. The industry had been demanding loan restructuring for a long time. Let’s understand how this central bank’s decision will apply to personal loans.

Which type of personal loan will be applicable?

According to the Reserve Bank guidelines, this facility is a consumer loan, education loan, housing loan, loan taken to buy share market-debenture, loan taken to buy consumer durables, credit card loan, auto loan (excluding working vehicle loan), loans taken in lieu of gold, jewelry, FDs, personal loans to professionals, and other loans taken for any other purpose are covered under this scheme.

What is the eligibility to avail the scheme?

The benefit of this scheme will only be given to individual borrowers who will be standard. Apart from this, up to 30 days defaulters will also get this facility till March 1, 2020. Defaulters longer than that will not be able to take advantage of this scheme. Apart from this, the account should be standard till the day on which the resolution plan will be implemented.

What is the deadline of this resolution plan?

According to the Reserve Bank’s guidelines, all banks have been given a maximum time till December 31, 2020 for the loan recast scheme. Apart from this, the time limit for implementing it is 90 days. That means the day the resolution process starts, it has to be implemented within 90 days.

What are the options that banks can give you?

According to the RBI guidelines, under the loan restructuring scheme, banks can offer payment reschedule to individual borrowers. Apart from this, interest can be segregated as a separate credit facility, banks can also offer moratorium in view of income although it can be for a maximum period of two years. Apart from this, it is possible to extend the loan period so that EMI is reduced. If the Moratorium option is agreed then it will be implemented as soon as the resolution plan is confirmed.

What are the other important conditions for the resolution plan?

According to the guideline, the resolution plan will be considered complete only when a) when banks and borrowers reach an agreement in this direction and proceed to the agreement on resolution. b) Under the agreement, whatever is decided between the lenders and the borrowers should be updated in the bank’s book of account. c) In addition, the defaulters should not be the defaulters of the bank.