HDFC Bank’s Retail Borrowers Must Have At Least Rs 25,000 To Avail Restructuring

India’s largest private sector lender said retail borrowers seeking to restructure their loan account or convert credit card debt will need to have a minimum outstanding balance of Rs 25,000 in their bank accounts.

Retail, corporate as well as small and medium enterprises can approach it for restructuring their dues, according to the frequently asked questions released by HDFC Bank Ltd. on its website. The lender may levy a charge for restructuring a loan, but it didn't say how much.

HDFC Bank has operationalised a restructuring scheme, introduced by the Reserve Bank of India for borrowers affected by the Covid-19 pandemic and the subsequent nationwide lockdown. As per the guidelines, lenders can extend the repayment period on these loans by up to 24 months.

“The customer has to be impacted financially by the Covid-19 pandemic in the form of reduction/ loss of income or cash flows,” the private bank said. Also, they must be standard borrowers, not in default for more than 30 days as on March 1 to be eligible.

HDFC Bank will seek details and proof regarding loss or reduction of income from the borrowers. They can apply for the restructuring scheme through a link provided on the bank’s website, or can contact their respective branches and relationship managers.

“The bank will assess the viability of a customer to pay the restructured EMIs (equated monthly installments) basis the documents provided, before granting the restructuring. Apart from the viability calculations, the repayment track record of the customer, and the responses given by the customer while availing moratorium earlier will be factored in the restructuring decision,” HDFC Bank said.

The scheme for restructuring is open to all customers of the bank, irrespective of the moratorium applied status, subject to the borrower meeting the regulatory guidelines of restructuring, the private lender said.

In case of co-borrower arrangements, all those involved with the loan will need to sign the restructuring agreement.

Proof Required

• Salaried customers must provide account statement and salary slips to show loss or reduction of income.
• Self-employed borrowers and entities will be required to submit account statements, goods and services tax returns, income tax returns, among other documents.

Impact On Credit Score

• If customers choose to restructure their loan account, then their account will be reported to the credit bureaus with a “restructured” tag, as is required.
• Even if the customer restructures only one loan, all of their dues pending with the bank will be reported as “restructured”.

Restructuring Options

• Under the restructuring scheme, customers may extend their repayment period by up to 24 months.
• Customers may also restructure credit card dues under the scheme, where the entire credit card balance, including dues pending will be converted into a new loan.

This follows State Bank of India's launch of a separate portal for its retail borrowers to apply for debt restructuring if their income has been affected by the pandemic.