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Have you got hit financially by the pandemic and have a loan obligation in ICICI Bank? Then keep calm as after reading this post you'll feel much relaxed.

The Reserve Bank of India recently released a framework to banks and other lending financial institutions to offer resolution plans to reduce the financial burden of the borrowers. Consequently, many banks have come up with their resolution plans. 

Following the RBI's framework for COVID-19 related stress, ICICI Bank has also come up to stand in a concord with its customers who got hit due to the coronavirus pandemic. The bank has brought up some relaxation with its recent guidelines on loan restructuring.

So, before you get to know about the relaxation plan, we guess there would be many of you, who are still not aware of this facility or benefit. Keeping this in view, let's get to know about the loan restructure firstly.

What is loan restructuring and how it helps?

In easiest terms, if you have taken a loan from a lender and fail to pay off it in line with the terms and conditions of the loan agreement, the lender may ask you to repay the liability. Furthermore, if necessary, the lender may also step ahead with legal procedures. However, if you submit a timely and proper loan restructuring application to the lender, as a result, you can get relaxation with certain benefits.

ICICI Bank loan restructuring plan

ICICI Bank is offering up to 2 years of moratorium benefit to retail borrowers under its loan restructuring plan. Those who have obligations to repay the loan or the credit card EMIs can apply for a one-time loan restructuring plan.

In line with the FAQs issued by ICICI Bank on its official portal, an individual will have to fulfill the eligibility criteria to apply under the loan restructuring scheme. One will have to apply for the loan restructuring on or before December 18, 2020.

Eligible credit facilities for loan restructuring

• Individuals and businesses with credit facilities classified as ‘Standard Account’ and are not in default for over 30 days as of March 1, 2020, are eligible to apply under the ICICI Bank loan restructuring scheme.
• The credit facilities should remain as ‘Standard Account’ till the invocation date* of the application for the restructuring.

*Note: The invocation date is the date on which both the borrower and the lender accept to continue with the resolution plan.

• Those who got hit financially in any way due to the coronavirus pandemic are eligible to apply for the loan restructuring scheme. However, the bank will assess the impact on the borrower’s cash flow or income based on documentation and details proposed.

How to avail of benefit under ICICI Bank loan restructuring scheme?

If you want to avail the credit facilities under the ICICI Bank loan restructuring plan, here are the 3 mediums that you can opt for:

1. Online*

To apply online, you’ll need to visit the official portal of ICICI Bank. A One Time Password (OTP) will be created during the online application process and will be sent to the registered mobile number and e-mail ID with your bank account. Thus, make sure that the mobile number and e-mail ID registered with your bank account are accurate.

Note* - The link will be provided soon on the official portal by the ICICI Bank.

2. Offline

All you need to do to apply for a loan structuring scheme via an offline medium is visit the nearest loan servicing branch of ICICI Bank.

3. Contact Relationship Manager

Another method to apply besides online and offline medium is to co-ordinate with your relationship manager (RM) and s/he will guide you further for the same.

Documents needed

Documents that you’ll need to submit along with your application for the restructuring of loan are as follows:

Documents required to apply for loan restructuring
Salaried	Self-Employed	Entities
Salary slips since January 2020	Bank statement for last 1 year	Last audited financial numbers for FY-19
Bank statement since January 2020	GST returns for H1* FY-20 and H1 FY-21	Provisional/Audited financial numbers for FY-20
Proof of job loss (if lost)	-	Projected financial numbers till FY-22
Customer’s declaration for being unemployed (if any)	-	GST returns (if applicable) or CA certified turnover (if GST unavailable) from April-19
-	-	Bank statement from April-19

Note* - H1 refers to the first half of a fiscal year (April-September)

Sorts of loans eligible for restructuring

Loans to individuals

1. Consumer loans (credit card outstanding balances, auto loans except for commercial usage, secured personal loans except for business purposes, personal loans to professionals except for business purposes, etc.)
2. Home loans
3. Education loans
4. Loans are taken for investment purpose in financial assets (shares etc.)

Loans to businesses

1. Business installment loan
2. Loan against property
3. Commercial cards
4. Dealer finance
5. Auto loans

The credit facility is not available to borrowers classified under MSME and having exposure up to Rs. 25 Crores. If your entity falls under such, then you can apply under RBI’s MSME restructuring scheme.

Additional charges on the restructuring of the credit facility

The bank takes an additional interest in the credit facilities which will be restructured.

The Bottom Line

In summary, loan restructuring is the way through which lenders extend benefits with one or some concessions to the borrower who is struggling financially due to certain reasons.

There are certain eligibility criteria that a borrower needs to meet in order to propose an application for the restructuring of the loan.

In accordance with the framework issued by RBI on COVID-19 related stress, ICICI Bank has come up with its loan restructuring scheme. To avail of the benefits under it, you will need to apply on or before December 18, 2020.

However, it is not guaranteed that the submitted application for the restructuring of the loan will be accepted and implemented by the ICICI Bank. Even though this is just the beginning of the entire process, bank reviews the application based on its internal policies and turnaround to you within 10 days post they receive the application with complete documents via SMS and e-Mail about its acceptance or rejection.