HDFC Loan Restructuring

Resolution Framework 2.0

The Reserve Bank of India (RBI) had announced the Resolution Framework 1.0 (‘RF 1.0’) on August6,2020. This RESOLUTION Framework enabled lenders to implement a resolution plan for borrowers impacted by COVID related stress subject to fulfilment of eligibility criteria.

Faced with a resurgence of the COVID-19 pandemic, the RBI, on May 05, 2021 announced the Resolution Framework – 2.0 (‘RF 2.0’). The objective of this Resolution Framework is to alleviate the potential stress of individual borrowers as well as small businesses due to Covid-19 resurgence.

As mandated, Housing Development Finance Corporation Limited (HDFC Limited) is offering Resolution Plans to eligible borrowers to address the financial stress faced by its borrowers owing to the economic fallout related to the COVID-19 pandemic.

Frequently Asked Questions (FAQs) of the scheme

1. What is Resolution Framework 2.0?

RBI has provided a Resolution Framework to Lending Institutions for implementation of a Resolution Plan for eligible borrowers who have been financially impacted due to resurgence of COVID-19.

2. What is the eligibility criteria for requesting for Resolution Framework 2.0?

  1. Loan accounts which are classified as standard, as on March 31,2021, are eligible to avail Resolution Framework 2.0.
  2. The borrower has to be impacted financially by COVID-19 pandemic thereby resulting in reduction/ loss of income or cash flows.
  3. The Borrower has to make a request in the prescribed format along with documents evidencing the reduction / loss of income. Based upon the documents submitted, discussions and / or other checks and verifications, the viability of the customer to pay the restructured EMIs will be assessed before granting a resolution.

3. In case a loan account has availed the benefits of RF 1.0, can they avail of RF 2.0?

Where Borrowers had availed moratorium of less than two years and / or extension of residual tenor by a period of less than two years under RF 1.0, the plan can be modified under RF 2.0 only to the extent of increasing the period of moratorium or extension of residual tenure to a maximum of 2 years cumulatively (i.e. including RF 1.0 and RF 2.0).

4. What is the rate of interest applicable under RF 2.0?

The interest rate applicable will be 8% p.a. or the current applicable rate on the borrower’s loan account, whichever is higher.

5. What is the fee payable for RF 2.0?

A fee of up to Rs. 5,000/- plus taxes will be charged as processing fee for RF 2.0 in every loan account. The fee needs to be paid prior to implementation of RF 2.0.

6. Which loan products are covered under RF 2.0?

RF 2.0 covers the below mentioned loans to individuals:

  1. Home Loan, Home Extension Loan, Home Renovation Loan, Plot Loans
  2. Home Equity Loan availed for purpose other than business
  3. Top Up loan availed for purpose other than business.
  4. Top Up loans for Insurance

Equity Loans or any non housing loans availed for business purposes shall be eligible under the RF 2.0 only if the overall exposure of such borrower/s with all Banks and Lending Institutions, including fund based and non-fund based lending does not exceed Rs. 50 Cr. as on March 31, 2021.

7. Are NRI loans covered under RF 2.0?

Yes, NRI loans are covered under RF 2.0. Documents will need to be executed in India by the borrower or POA.

8. Incase I have multiple loans, do I need to apply separately for each loan?

Yes, for each loan a separate request is to be submitted.

9. I have availed the loan along with co-applicant. Do we need to apply together?

The main applicant can request in the prescribed format along with all the supporting documents. The implementation agreement for RF 2.0 shall be signed by the borrower and all co-borrower/s.

10. What documents will be required for appraising loans under RF 2.0?

The borrower will be required to submit a request in the prescribed format along with supporting documents as may be required by HDFC. Following documents would mandatorily be collected in support of the borrower's claims:

  1. For Salaried customers –
    1. Termination letter/ notice of discharge,
    2. Bank account statements (last 6 months),
    3. A minimum of 2 latest Salary Slips/ Certificates etc.
    4. Any other document as required by the appraising team.
  2. For Self Employed Customers –
    1. Latest GST returns/ Sales ledger,
    2. Contract/ Work order termination letter,
    3. Provisional accounts for March, 2021
    4. Form 26AS,
    5. Electricity / Telephone Bill of business premises,
    6. Copy of notice received from the tenant for termination/ Reduction of lease rental,
    7. Bank account statements (8 months)
    8. Any other document as required by the appraising team.
  3. In addition to above loss of income/ financial stress will be checked from -
    1. Bureau reports,
    2. Customer Credit Verifications (CCVs) ,
    3. Repayment track of all loans taken by the customer with EMIs / last payment date,
    4. Details of stock / Debtors/ other business assets ,
    5. Copy of notice given to the landlord for termination/ Reduction of lease rental, etc.
    6. Any other document as required by the appraising team.
  4. Details of Institution wise loans outstanding as on March 31, 2021.
  5. Details of MSME / Udyam registration ( if available )

The list of documents mentioned above are indicative in nature and may vary on a case to case basis. All the supporting documents / reports will be kept on record as evidence of the financial distress faced by the borrower.

11. What is the last date for submitting request under this facility?

The last date for submission/receipt of request in prescribed format along with supporting documents is 25th September, 2021. Enquiries concerning or related to RF 2.0 shall not be considered as a request for consideration of RF 2.0.

12. How can I request to restructure my HDFC loan?

For inquires related to RF 2.0, please write to us at [email protected] from your registered email id. Kindly mention your file no in the subject line of the email. To avail this benefit the borrower needs to submit current documents. Submission of request/documents or making an inquiry does not entitle the borrower for RF 2.0 and that it is subject to assessment/appraisal by HDFC.

13. Does invocation under the Resolution Framework require the borrowers to submit any specific resolution plan?

No. The Resolution Framework does not require any resolution plan in any form to be submitted to HDFC at the time of request for invocation. Rather, for invocation, the borrowers are required to merely submit a request in the prescribed format along with supporting documents to HDFC for being considered under the Resolution Framework. Thereafter, HDFC will take an in-principle decision on invoking the Resolution Framework. After such invocation, the specific contours of resolution plan to be implemented may be decided by HDFC on consultation/discussion with its borrowers.

14. Will opting for the restructuring package have an impact on my credit bureau report?

As per regulatory guidelines, your loan/ credit facility will be reported to the credit bureau as “Restructured due to COVID 19”. If the borrower avails of resolution framework for one account, all the facilities/ loans of the borrower with HDFC will be classified and reported as “Restructured due to COVID 19”.

15. Can EMIs, during moratorium, be waived?

No EMI waiver can be provided under the framework. EMIs/Principal Payments can only be deferred and the repayment will start on completion of moratorium period. However, if the cash flows of the borrower improves during the period of moratorium, the borrower may request HDFC to start the repayment immediately. After the commencement of repayment period, no further option shall be provided for resolution under this window, unless otherwise instructed by the RBI.