Loan restructuring to provide 2-yr moratorium, 7-yr repay time for individual borrowers

Srinagar: In a collective initiative by the banks operating in Jammu and Kashmir to help flood-affected people of the state, banks have announced restructuring and rescheduling of loans worth more than Rs 5,000 crore with a two-year moratorium.
Reserve Bank of India has given go ahead to the loan restructuring plan proposed by the banks in the State Level Bankers meeting last month, according to a Jammu and Kashmir Bank statement, which operates as the lead bank in the state.
As per the package, which has been devised by the Indian Banks Association (IBA), individual borrowers can restructure their loans until March 2015 and seek a two-year moratorium to repay loans. After the end of two years, the borrowers will get seven years to repay their loans.
The loans would be restructured at the minimum possible interest rates which will be close to banks base rates, TM Bhasin, chairman of IBA said here on Tuesday during the Credit-cum-Relief camp held at SKICC here for flood-affected business community.
For companies, working capital and medium term loans will be converted into long-term loans, payable through equated monthly instalments, Bhasin said.
The major portion of the restructuring of the loans about Rs 3,000 crore would be by the J&K Bank, which has more than 60 percent share of state loan book and about Rs 2,000 crore would be by other banks operating in the state.
As per the experts, the restructuring though will decrease the profit margin of the banks, it will help prevent the surge in bad loans.
Besides the restructuring of the loans, the National Housing Bank will be giving loans of up to Rs 500 crore to banks at 6.5 percent interest. Banks can lend that to customers at an interest rate of 8.5 percent, subject to a maximum of Rs 10 lakh per borrower.