Keeping in mind the financial losses that occurred to the people in the wake of the pandemic, the Reserve Bank of India introduced a one-time loan restructuring for lenders and borrowers. It has proved to be a big relief for businesses facing financial distress. Let us delve deeper into this financial scheme.
Under the scheme, the borrowers who faced financial difficulties due to COVID-19 including during lockdown, could renegotiate and make amends to their loan terms to revive the businesses and cash flows. Hence it would prevent the borrower from being listed as a defaulter in the bank and give them time to rearrange their finances. On top of that, the businesses can prevent their business from coming to a standstill by availing a one-time loan restructuring scheme.
The scheme has a strict entry barrier as compared to the previous loan restructuring schemes by the RBI. The people whose income sources have been adversely affected or are not able to pay their loan amount due to COVID-19 are only eligible for invoking the scheme.
As per instructions from the RBI, a borrower can avail of any of the three options while opting for this scheme
(It is to be noted in any case the tenure of loan can increase upto two years of the original repayment schedule. )
Another unique feature of the OTR scheme is that it is also applicable on loans drawn by individuals.
In the current economic crises where there seems to be no hope, this scheme has proved to be a ray of hope to financial lenders and borrowers. The Balance Sheet of the lenders is not impacted much.
To prevent borrowers from misusing the scheme, the financial lenders must scrutinise the applicants' credit history very carefully. It ensures that the plan reaches those borrowers who are actually in need of it.
Here is how the one-time loan restructuring policy will impact you as a borrower on the flip side.
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