COVID RESOLUATION PLAN

The following are the policy guidelines adopted by Bank with regard to implementation of the Resolution Framework 2.0 as per the Board approved policy of the Bank. (Personal Loans and Small Business Loans).

RBI vide notification DOR.STR.REC.11/21.04.048/2021-22 dated 05.05.2021 issued guidelines on Resolution Framework – 2.0: Resolution of Covid-19 related stress of Individuals and Small Businesses..

Resolution Framework 2.0: Resolution of COVID-19 stress for Individuals and Small

Businesses  –  Eligibility and Applicability

The credit facility / investment exposure to the borrower shall be standard as at  31.03.2021. The following borrowers (standard as on 31.03.2021) shall be eligible for resolution plan under the Framework 2.0

  1. Individual Loans: Personal loans refer to loans given to individuals and consist of
  •     Education loan,
  •     Vehicle Loan
  •     Housing loan / mortgage loan against property
  •     Business loan
  •     Solar Loan

The Resolution Framework 2.0 is not applicable to loans against fixed deposits and credit facilities sanctioned by the Bank to its own staff.

  1. Small Business Loans:

Small businesses, including those engaged in retail and wholesale trade, other than those classified as Micro, Small and Medium enterprises as on March 31, 2021.

The following accounts are also not eligible for Resolution under this framework

Borrowers who have availed any resolution in terms of the Resolution Framework 1.0.However, extension of moratorium, residual tenor can be permitted under this Framework.  Accounts which are not standard as at 31.03.2021

Invocation of Resolution Plan

Resolution under this framework shall be provided only to the borrowers having stress on account of Covid-19.

Resolution under the Framework shall be invoked not later than 30.09.2021 and resolution Plan shall be finalized and implemented within 90 days from the date of invocation of the resolution process.

The resolution process under this window shall be treated as invoked when the Bank and the borrower agree to proceed with the efforts towards finalising a resolution plan to be implemented.

Conditions of implementation of Resolution Plan

The resolution plan shall be deemed to be implemented only if all of the following conditions are met:

  1. All related documentation, including execution of necessary agreements between Bank and borrower are completed and collaterals provided, if any, are completed by the lenders concerned in consonance with the resolution plan being implemented;
  2. The changes in the terms of conditions of the loans get duly reflected in the books of the
    Bank; and,
  3. Borrower is not in default with the Bank as per the revised terms.
  4. Documents as approved and attached (Annexure 1 to 4) are to be obtained from the Borrower.

Security :  Existing securities shall continue to be extended for the restructured facilities.

Sanctioning Authority :  Chief Executive Officer.

Features of Resolution Plan 2.0

Rescheduling payments of instalments / EMIs of loans. Conversion of any interest accrued, or to be accrued, into another credit facility, or, granting of moratorium, based on an assessment of income streams of the borrower, subject to a maximum of two years from the date of implementation of resolution plan.

The extension of the residual tenor of the loan facilities may also be granted with / without moratorium. In such cases, the overall cap on extension of residual tenor inclusive of moratorium period shall be maximum of two years.

  1. Individual Loans for Business Purposes and Small Business Loans other than MSME (irrespective of constitution):
  1. Bank may allow extension of the residual tenor of the loan, with or without moratorium, by a period not more than two years. The moratorium period, if granted, shall come into force immediately upon implementation of the resolution plan under this framework.
  2. The extension of the residual tenor of the loan facilities may also be granted to borrowers, with or without payment moratorium. The overall cap on extension of residual tenor, inclusive of moratorium period if any permitted, shall be maximum of two years.
  3. Bank may also exercise option to reschedule repayment of Principal/Interest. With all the steps, repayment period can be extended upto a maximum of 2 years only.
  4. Fresh repayment schedule to be generated in case of all Term Loans where Resolution Plan is implemented under this framework.

Borrower enjoying Working capital limits:

  1. In case conversion of any interest accrued, or to be accrued, in to another credit facility is permitted as per Resolution Plan, then additional interest of 1.00% p.a. shall be charged for such additional / conversion / new facilities. This additional ROI will be benchmarked to the prevailing ROI in respective account.
  2. Unpaid Interest upto invocation date, and interest accrued beyond RP invocation date/ Future interest to be accrued on additional finance/deficit finance, for a maximum period of 6 months, may be converted into FITLs.
  3. Moratorium of maximum 6 months may be factored for repayment of monthly installments of such FITLs However, monthly interest on such FITLs to be paid / recovered, as and when debited.
  4. Such FITLs to be repayable within a maximum period of 2 years, including moratorium period permitted, if any.

FITLs will carry additional ROI @1% per annum over and above the prevailing / sanctioned ROI for the underlying facilities.

Extension of moratorium and residual  tenor of loans where Resolution Framework 1.0 Implemented

  1. In case of borrowers where resolution plan had been implemented in terms of the Resolution Framework – 1.0, and where the resolution plan had availed no moratorium or moratorium of less than two years and / or extension of residual tenor by a period of less than two years, it is now permitted to modify the moratorium and extension of residual tenor upto a period of two years only. The overall caps on moratorium and / or extension of residual tenor granted under Resolution Framework – 1.0 and this framework combined, shall be maximum of two years.
  2. However, the same can be permitted to accounts which are fulfilling the criteria under Resolution Framework 2.0. The guidelines regarding eligibility, invocation and implementation shall be applicable.

The following are the policy guidelines adopted by Bank with regard to implementation of the Resolution Framework as per the Board approved policy of the Bank for MSME.

RBI vide notification Vide notification DOR.STR.REC.12/21.04.048/2021-22 dated

05.05.2021 issued guidelines with regard to Resolution Framework 2.0 – Resolution of

Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs).

Resolution Framework 2.0: Resolution of COVID-19 related stress of Micro, Small

and Medium enterprises (MSMEs) as per RBI Notification dated 05.05.2021

  1. Restructuring of existing MSME borrower accounts under the scheme

Eligibility and Applicability

  1. The credit facility / investment exposure to the borrower shall be standard as at 31.03.2021 and not restructured previously.
  2. Unit should be under stress on account of COVID-19 economic fallout and should be viable for considering under the resolution plan.
  3. The borrower should be classified as a Micro, Small or Medium Enterprises on March 31, 2021 in terms of the Gazette Notification S.O. 2119 E dated June 26, 2020.
  1. If the borrower is not registered in the Udyam Registration portal, such registration shall be required to be completed before the date of implementation of the restructuring plan for the plan to be treated as implemented.
  1. The borrowing entity is GST-registered on the date of implementation of the restructuring. However, this condition will not apply to MSMEs that are exempt from GST-registration. This shall be determined on the basis of exemption limit obtained as on March 31, 2021.
  1. Restructuring of the borrower account is invoked by September 30, 2021.
  2. The restructuring of the borrower account is implemented within 90 days from the date of invocation.
  1. Accounts which may have slipped in to NPA category between April 1, 2021 and date of implementation may be upgraded as ‘standard asset’, as on the date of implementation of the restructuring plan.

Restructuring process under Resolution Framework 2.0 for MSMEs

The resolution plans consists of the following:

  • Rephasing / Rescheduling the repayment in case of an outstanding term loan with or without change in balance repayment period/installments.
  • Conversion of irregularities or a portion in outstanding working capital limits into WCTL (Working Capital Term Loan)/FITL (Funded Interest Term Loan) payable over period.
  • Rescheduling the payment of interest outstanding/accruing on term loans into FITL/deferment or conversion into FITL/debentures/ equity.

Processing Charges : 0.50% of the outstanding loan account eligible for resolution.

Documentations :  Documents as approved and attached (Annexure 1 to 4) are to be obtained from the  Borrower.

Security :  Existing securities shall continue to be extended for the restructured facilities.

Sanctioning Authority :  Chief Executive Officer.