State Bank of India will seek either a personal guarantee from promoters or pledge of listed shares as part of its process of restructuring non-personal loans. India’s largest lender detailed its rules for such restructuring on Sept. 21, which the Reserve Bank of India permitted without a downgrade in classification of the loan to non-performing. A list of benchmarks have been provided by an RBI-appointed committee on restructuring of loans in individual industries.
Banks, however, have also been asked to frame board level policies for the upcoming restructuring. In a set of frequently asked questions issued, SBI said additional security would need to furnished in the case of restructuring.
The lender also said that an upfront processing fee of 0.25% of the aggregate loan amount would be charged. For term loans and working capital loans, among others, the interest cost would be raised by 100 basis points over the existing rate for working capital loans.
In the case of any additional loan facilities, SBI will ask promoters to contribute capital infusion of 10- 15% of the fresh sanctions. The bank will also retain a right of recompense for any concessions provided during the period. The framework isn’t applicable to personal loans and MSME borrowers with loans up to Rs 25 crore. Restructuring schemes for those categories fall under a separate set of rules, SBI said.
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