SBI recasts loans of 4,000 retail borrowers
State Bank of India (SBI) has recast loans of just around 4,000 retail borrowers so far under the limited window of the Reserve Bank of India (RBI), indicating that barring micro, small and medium businesses, not many are availing of easier repayment norms.
CS Setty, managing director of India’s top lender by assets, said in an interview that 100,000 retail borrowers logged on to its website to check their eligibility, but not many were found to have met the stringent conditions set by RBI.
Lenders have till December-end to agree on recast plans for retail borrowers and an additional 90 days to implement them. “The reasons for borrowers not being eligible include loans being more than 30 days overdue on March 1. That apart, many also wanted to check out (their eligibility) despite not having lost their jobs or income. There are people who have had no decline in income due to the pandemic but still checked out their eligibility,” said Setty.
SBI, he said, has also seen instances where borrowers took other short-term loans to clear their pending dues.
The bank introduced a feature on its website that allowed borrowers to avail of gold loan, personal loan and even mortgage top-up loan when their bid to get debt recast was turned down.
“That would save the account from slipping into non-performing category. What we encourage people is that there are two ways to handle the default,” said Setty. The first option is to choose to restructure if eligible, and if not, “then we believe that borrowers should not tarnish their credit history, and instead should look for alternative financing options.”
SBI’s retail and personal loan segment made up 38.1% of its total loan book and stood at Rs 7.85 lakh crore as on September 30, 2020, up 15% from the same period last year. Of this, home loans are at Rs 4.68 lakh crore. Setty said most requests for loan recasts are from the micro, small and medium enterprise (MSME) sector but that is under the RBI recast package first allowed in January 2019 and recently extended in August this year, which is available until March-end next year.
SBI has about 40,000 small businesses who have, so far, availed of the facility to ease repayment conditions.