Banks are taking a considerate view on home loan repayment by job-loss victims, thereby helping borrowers retain their homes. Although the March 31 deadline set by the Reserve Bank of India for receiving loan restructuring applications has expired, banks continue to consider such proposals from home loan borrowers. The relief offered by banks include granting EMI holidays to borrowers faced with job losses and pay cuts. “We are open to such restructuring proposals, including EMI holidays, even now and are mulling other options,” confirmed a senior official with a leading private bank, on condition of anonymity.
“We restructure loans based on our internal guidelines and regulatory requirements. Decisions are taken based on the merits of the case,” added Ravi Subramanian, head, consumer assets, HSBC India. Once the borrower approaches his / her bank spelling out the difficulties in repaying the loan, the bank works out a mutually-agreeable repayment solution. Debt restructuring packages include extending the loan tenure, waiver of part-interest or allowing an EMI holiday to help overcome a temporary crunch. However, banks take pains to ensure the authenticity of the distressed borrowers’ claims and grant relief on a case-to-case basis. “If the borrower cant pay three EMIs (three monthly instalments), the bank will restructure the loan in a way that the interest accrued for that period is added to the outstanding principal amount. The repayment schedule is worked on the new principal amount. But we check the borrower’s rating with CIBIL and his / her repayment behaviour with other banks before arriving at any such decision,” said Sujan Sinha, senior vice-president for retail banking, Axis Bank.
“We intend to cross check with the borrower’s employer to ascertain whether a job loss / pay cut has actually occurred and the borrower is not taking advantage of the restructuring option being available now. We also ask borrowers for a copy of the official letter that mentions the pay cut / retrenchment, if required,” added another bank official. As a consequence of this empathy on part of the banks and increase in awareness among borrowers, the resolution rate at credit counselling centres has gone up. “In several cases, we have seen that banks do reschedule loans if they are convinced that the borrower’s predicament is genuine,” informed Madan Mohan, credit counsellor at the ICICI Bank-supported Disha Financial Counselling. And it’s not just the borrowers who stand to gain from this arrangement. Accepting such proposals would enable banks to cut down on litigation and recovery-related expenses. “Logically, banks do not stand to lose if they have to wait for even six months because the process of seizing the mortgaged asset, putting it up on sale and realising the proceeds would be equally time-consuming,” pointed out VN Kulkarni of the Bank of India-backed Abhay Credit Counselling centre.
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