Should You Restructure Your Loans?

We answer the question," Should you restructure your loans?" and discuss here the major details of the one-time loan restructuring programme announced by RBI for all banks and NBFCs for borrowers in financial distress after the outbreak of the COVID19 pandemic. FundooMoney Website: www.fundoomoney.com Subscribe:    / @fundoomoney   Visit YouTube channel:    / fundoomoney   Share Video:    • Should You Restructure Your Loans?   Edited Highlights: 0:00 We will discuss here the loan restructuring programme recently announced by Reserve Bank of India and to be carried out by the banks to help borrowers financially distressed the economic crisis triggered by Coronavirus Pandemic 0:28 The details of the loan restructuring programme are being worked out by the K.V.Kamath Committee but the broad contours of the programme indicate provisions for relief for distressed borrowers 0:38 This will be done by a one-time restructuring of the loan 1:16 RBI recently announced a one-time loan restructuring programme for borrowers in financial distress after the outbreak of the Coronavirus Pandemic 1:24 The major features of the programme are such that they allow the distressed borrowers time to adjust to the economic disruptions and get their loan repayment process back on track 1:50 While the finer details are being worked out by a committee advising the RBI headed by veteran banker K.V.Kamath. The recommendation will be given to RBI and banks will be guided by them for their own norms 2:03 We will discuss here the broader features 2:20 We will be discussing here what is being referred to as "personal loans" and not corporate loans 2:37 Here, when we refer to personal loans, it covers the whole gamut of loans to individuals including consumer loans, personal loans, property loans, education loans 2:47 These loans would have been given by lenders including private banks, foreign banks, public sector banks besides NBFCs and cooperative banks 3:10 The loan restructuring programme conditions try to ensure that this only benefits people who have been impacted COVID-9 disruptions 3:27 So, till March 31, 2020 if any borrower had upto or less than 30 days outstanding for the regular loan repayment qualifies for the one-time loan restructuring programme 3:45 The idea is that only those who suffered from COVID19 lockdown and other related effects should get relief 4:01 One of the most likely features of the loan restructuring programme would be extending the period or term of the loan 4:18 The rationale behind the one-time loan restructuring is to avoid another period of EMO moratorium or loan repayment moratorium that started during the COVID-19 lockdowns 4:37 This is expected to prevent many borrowers being classified as defaulters and the loans becoming Non Performing Assets for banks 4:55 The loan restructuring will lengthen the loan term up to 2 years 5:02 An applicant will need to avail of this programme by the end of the current calendar year i.e. December 31, 2020 5:24 If you avail of the loan restructuring programme, you will end up paying higher interest rate. This would be upto 30 basis points or 30 percentage points more 5:35 This is so as the loan restructuring means that the banks need to incur additional cost in extending the loan tenure 5:51 If you had availed of EMI moratorium or loan repayment moratorium during the COVID-19 lockdown, the interest payable for the period can be taken out as a loan and repaid 5:59 This can be paid over two years 6:10 The key about the one-time loan restructuring programme is the additional cost that you will need to pay 6:29 You are being given more time and the additional breathing space FundooMoney Useful Links Facebook:   / fundoomoney   Instagram:   / fundoomoney   Pinterest:   / fundoomoney   Twitter:   / fundoomoney   SoundCloud: soundcloud.com/fundoomoney SlideShare: www.slideshare.net/FundooMoneyWorld LinkedIn:   / fundoomoney