Resolution process has to be invoked within 30 days from the receipt of the application
Public Sector Banks (PSBs), under the aegis of the Indian Banks’ Association (IBA), have formulated a templated approach for seamless implementation of RBI’s Resolution Framework 2.0 for restructuring loans to individuals, small business and MSMEs up to ₹25 crore.
The process flow envisaged for individual loans includes a) customer accessing the bank’s portal or manually submitting application for restructuring and b) processing of application and implementation in the system.
The resolution process has to be invoked within 30 days from the receipt of the application. The last date for invocation is September 30.
Invocation means that both the borrower and the bank agree to proceed with the Resolution Plan, which will include rescheduling of payments, granting of moratorium and extension of tenor. Decision in this regard will be communicated to the borrower in writing.
The Resolution Plan has to be implemented within 90 days from the date of invocation, but not later than December-end 2021.
The moratorium period granted will be for a maximum of two years, and it will start immediately after the implementation of the Resolution Plan.
Business, MSME loans
For implementation of resolution framework for business loans, banks have categorised loans into three categories – up to ₹10 lakh, ₹10 lakh and up to ₹10 crore, and above ₹10 crore
Under the templated standardised approach for restructuring Business and MSME loans up to ₹10 lakh, banks have sent bulk SMS to eligible customers including the already restructured accounts.
Offer-cum-acceptance letters, along with application, has been generated centrally. Customers have to provide consent in the offer letter itself. The application will then be processed.
Resolution invocation has to happen within 30 days of receipt of acceptance. Post-invocation, resolution plan has to be implemented within 90 days.
For loans above ₹10 lakh and up to ₹10 crore, and above ₹10 crore, banks will take a graded approach for restructuring. It will also include standard application and assessment formats, standard and simplified documentation, and common outreach approach
Sunil Mehta, Chief Executive, IBA, said a grievance redressal mechanism, comprising nodal officers, has been put in place to address customer complaints.
The Reserve Bank of India (RBI) announced a ‘Resolution Framework 2.0 for Covid-Related Stressed Assets of Individuals, Small Businesses and MSMEs’ on May 5.
Under the framework, borrowers – individuals, small businesses and MSMEs – having aggregate exposure of up to ₹25 crore and have not availed restructuring under any of the earlier restructuring frameworks and were classified as ‘standard’ as on March 31are eligible to be considered under Resolution Framework 2.0.
Restructuring under the framework can be invoked up to September 30, and has to be implemented within 90 days after invocation.