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Loan repayment made flexible
Source : The Hindu Property Plus Published On : 2009-02-07 City : Kochi

N.Panneer selvam availed home loan from a public sector bank. The economic downturn and job uncertainties compelled him to rethink his home loan repayment plans. He wanted to restructure it and made a request to the bank. To his surprise, the bank agreed to add five years to his repayment period.

This reduced his Equated Monthly Installments (EMI) and made it possible for him to pay. “I am relieved," says the visibly happy Pannerselvam. "The restructuring process of housing loans is the most important thing happening now. We are doing it vigorously taking a sympathetic view of our customers position," said J.Chandrasekaran, Chief General Manager, Local Head Office, State Bank of India,

The State Bank of India has carried out rephrasing or restructuring of more than 12,000 home loans of its customers in the past two weeks in Tamil Nadu. "Our bank has done rephrasing of loans for more than 1,500 home loan customers in and around the city in the past 15 days," said Mr.Chandrasekaran.

However not all customers are as lucky as Mr. Pannerselvam. Despite the directive from the Reserve Bank of India, many are not able to get the benefits of restructuring from the Scheduled Commercial Banks. Many are not even aware of the possibility and instead are opting for closures.

Repayment holiday

According to the guidelines of the Reserve Bank of India, all Scheduled Commercial Banks, excluding Regional Rural Banks and Local Area Banks, can restructure the home loan of the customers on receipt of an application before the deadline.

The banks can also help the customers by providing repayment holiday up to six months in order to help the customers hit by the financial crisis. People who have lost their jobs can request the scheduled commercial banks concerned to restructure their housing loans, said the official.

The guidelines of one of the public sector banks’ credit division also says that the branches of the bank shall immediately review the entire housing loan portfolio and list out those accounts which are showing persisting overdue.

It also reads that "all housing loans irrespective of their asset code are eligible for restructuring."

It further adds, "Wherever borrowers are finding it difficult to service the housing loan due to genuine reasons, such loans may be taken up for restructuring."

Many branches of the scheduled commercial banks, however, are reluctant to provide a repayment holiday for the customers.

They are just extending the period of repayment of the loan with relatively affordable EMI. This sometimes stretches beyond the year of retirement of the borrower, said a banker.

Not so lucky

The customers of housing finance companies such as LIC Housing finance and Housing Development Finance Corporation Limited (HDFC) are not so lucky. They have not been provided the benefits of restructuring similar to the home loan customers of the public sector banks.

The officials of the housing finance institutions say that they were yet to receive any guidelines from the National Housing Bank.

"Of the 91,000 live accounts we have not received any request for restructuring from our customers of housing loan," said a senior official of HDFC in Chennai. Officials of LIC housing finance also voiced similar views.

"We have the social obligation to help the home loan customers with a good track record," said a senior official of State Bank of India.

On the other hand, an official of the Union Bank of India says that "only if our customers make a request for restructuring of their housing loan in the required format we consider the loan for restructuring". Customers unaware

 
 
Customers unaware

But many customers are not aware of these guidelines of the Reserve Bank of India and they are forced to opt for closure.

"If the customer is not able to pay three EMIs the bank can take possession of the property," said an official of Corporation Bank.

"Some of the customers unable to pay the loan have sold the property and opted for closure. Our branch recently had 10 such customers," said the official.

"We have also restructured the loans of eight of our housing loan customers recently," said the official.

As housing loan accounts started leaning towards delinquency and a large number of borrowers are finding it difficult to meet their repayment obligations, RBI has decided to extend the deadline from January 31 to March 31. This, many hopes, will give more opportunities and help home loan customers replay their payments.

ALOYSIUS XAVIER LOPEZ
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