SBI offers up to two years repayment relief for home & retail loans – ET RealEstate

MUMBAI: State Bank of India will provide relief to home and retail loan borrowers impacted by Covid-19 in the form of either a moratorium of up to 24 months or by rescheduling instalments and extending the tenure by a period equivalent to the moratorium granted.

The moratorium period can be extended by a maximum of 2 years, India’s largest lender said Monday, setting the tone for other banks, specially PSU players.

In line with RBI’s one-time relief, the scheme is available to borrowers who had availed of a home loan before March 1, 2020 and were regular in repayments until the Covid-19 lockdown.

But the borrowers will have to demonstrate that their income has been hit because of the pandemic.

“For the purpose of restructuring, the bank will depend entirely on the customer’s assessment of when they expect their income to be normalised or to get employed,” said SBI managing director C S Setty said while announcing the scheme.

The country’s largest lender has been the first to roll out a protocol for restructuring loans of retail borrowers who were affected by Covid-19. Other lenders including HDFC and ICICI Bank are expected to follow suit before the end of the month.

To facilitate borrowers to understand their eligibility for restructuring, SBI has launched an online portal to enable borrowers check their eligibility for all retail loans. This includes home, education, auto, and other personal loans.

The restructuring will give breathing space for a borrower until their income is normalised or they get re-employed. Also, they will not be classified as defaulters or non-performing assets. The downside is that the bank will charge 35 basis points extra as interest since the RBI needs them to set aside additional provisions for these loans. This means that despite initial relief over the tenure of the loan, the borrower will end up paying more than on a regular loan without restructuring.
SBI offers up to two years repayment relief for home & retail loans“We have put in place a scheme for restructuring and it is available to borrowers through our internal portal. We have also intimated borrowers but don’t expect much of traction for restructuring given the inquiries,” said Rajkiran Rai, MD & CEO, Union Bank of India.

HDFC Bank has put in place a facility to submit online applications. The bank has said that it will report the loan to the credit bureau as ‘restructured’ and as per norms, all loans availed will be classified as restructured even if only one loan is being restructured.

“The dues for the moratorium period can be capitalised. Or else it will be very strenuous for the borrower to repay. Capitalising the dues will reduce the pressure on the borrower and we are also working on this by elongating the term of the loan,” said Siddhartha Mohanty, MD & CEO, LIC Housing Finance. He added that even if the loan term is extended, typically home loan borrowers end up pre-paying their loans by seven to ten years.

Borrowers who access SBI’s portal for restructuring will still have to visit the branch as a ‘wet signature’ is required for the loan document to be reworked. The portal will however take care of all the queries of the borrower. “It is not an end-to-end process but it will reduce the need for customers to visit branches especially during this time of Covid,” said Setty.

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Banks plan EMI deferment for home loan restructuring – ET RealEstate

MUMBAI: Lenders, including SBI, are working on restructuring options for home loans where the overall tenure of the loan does not extend by more than two years, even after relaxing the repayment schedule.

The options include allowing EMI deferment for a few months in cases where the borrower has suffered total loss of income or allowing step-up EMIs, with a lower payout for a couple of years to make up for a reduction in salary or loss of income due to the pandemic.

According to sources, the KV Kamath committee will not look into retail and home loan restructuring and banks will draw up their own proposal which they will submit to their boards by early next month after getting an idea of the number of borrowers facing stress.

Bankers are keen to restructure loans in order to avoid having to classify defaulters as non-performing assets. Also, banks say this isn’t the right time to enforce security and attach assets. Though RBI has let banks extend loan tenure by two years, bankers say that they cannot provide a two-year moratorium.

Anyone with a 15-year loan who has availed moratorium for six months will already see their overall loan tenure extend by 14 months. This means that at most banks can defer EMI by a few months. The exact relaxation would depend on the interest rate that the borrower will be paying. While home loan rates have come down to below 7%, banks say that it will be difficult to provide their best rates to restructured loans as lenders have to make an additional provision of 10% on restructured loans. This will increase costs by up to 30 basis points.

According to the terms of reference of RBI’s appointment the Kamath committee is expected to submit its report by mid-September. Bankers expect the committee to give various parameters for restructuring including the maximum debt-equity ratio to be allowed, the permissible leverage for each sector like hospitality, aviation, real estate, or construction.

The committee would also decide under what circumstances can conversion of debt to equity would be allowed. In addition, every individual corporate loan, where bank exposure is over Rs 1,500 crore would be reviewed by the committee to consider restructuring.

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Chennai: 1,000 buyers in fix as SBI puts clubhouse they paid for on the block – ET RealEstate

CHENNAI: Around 1,000 residents of an apartment complex in Thirumudivakkam in the southern suburbs are in a spot, with State Bank of India putting up a club house on the premises for auction over a mortgage default.

The residents paid Rs 1 lakh-Rs 1.5 lakh each for developing the club house as a common property, but, the fine-print of the agreement with the builder showed the property was owned by him. He later mortgaged it against a loan with the bank which decided to hold the auction on August 28 after he defaulted on payments.

A Moorthy, president of the residents association, said most flat owners were senior citizens who paid a sizeable sum for the ‘Royal Club’. “The builder took funds from us saying it was for construction of the club house, but we did not get ownership. We don’t know what to do now,” said the 62-year-old.

While the builder couldn’t be reached for comment, the association’s complaint to SBI hasn’t got a response. TOI also studied documents related to the case.

P Balaji, counsel for the residents, said the builder, while selling the flats, insisted on payment of membership fee for the club house. “They got an estimate sheet, promising 22sqft to each resident. But, the residents did not check the agreement which clearly mentioned the builder was owner of the clubhouse,” Balaji said.

Now, despite the property being auctioned, the residents can’t claim money from the auctioned sum. “We can only prefer a criminal complaint,” Balaji said.

Legal experts who vetted the documents said the residents could file individual suits for compensation, but that such cases could drag on for years.

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Union Bank of India cuts home loan interest rate to 6.7% – ET RealEstate

MUMBAI: Union Bank of India has slashed interest rate on home loans for salaried to 6.7%, which is lower than the general category mortgages of State Bank of India (SBI), which has traditionally offered the lowest interest rate.

Union Bank charges 6.7% for loans up to Rs 30 lakh for salaried borrowers with a credit score of at least 700, which must include a woman applicant. For loans above Rs 30 lakh and up to Rs 75 lakh, the best rate is 6.95%. For larger sized loans, interest rates begin at 7%. For salaried borrowers, where a man is the sole borrower, the rate is 6.75%, which is also the rate for non-salaried borrowers.

SBI’s home loan rates for women borrowers for loans up to Rs 30 lakh start from 6.95%. Last month, LIC Housing Finance had reduced interest rates to 6.9%— its lowest ever. Another public sector lender, Bank of Baroda, has home loans starting from 6.85%. Market leader HDFC currently charges 6.95% for loans up to Rs 30 lakh where the borrower is a woman. For loans up to Rs 30 lakh to Rs 75 lakh, the interest rate rises to 7.2%.

Home loan rates are expected to dip further in coming weeks with the Reserve Bank of India widely expected to cut its benchmark repo rate by 25 basis points (100bps = 1 percentage point) in its next bi-monthly policy review to be announced on August 6. Since banks have to mandatorily link the reference rate for the home loans that they offer to the repo, any change by the RBI will bring down the cost of funds for borrowers.

While there has been a drop in property sales during the lockdown, lenders are also trying to grow their market share by attracting existing borrowers from other lenders through refinance. Union Bank of India, which has acquired Andhra Bank and Corporation Bank, has increased its branch network following the merger.

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