Canara Bank Resolution Framework for Personal Loans – FAQs

03 Nov 2020 // 12 min read // Personal Loans
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After the Reserve Bank of India (RBI) released the ‘Resolution Framework for COVID-19 Related Stress’ in September 2020, Canara Bank has explained its guidelines for Resolution Framework for Personal Loans.

The guidelines are mentioned in the form of Frequently Asked Questions (FAQs) on the bank’s website in four different sections, viz.:

  • Personal Loans
  • Mid Corporate Credit
  • Micro, Small and Medium Enterprise Credit
  • Large Corporate Credit

Read below for FAQs on Canara Bank’s Resolution Framework for Personal Loans:

FAQs on Resolution Framework for Personal Loans

✅ What are the criteria to be eligible under this Resolution Plan?

All retail borrowers of the bank having stress due to COVID-19 and classified as standard, but are not in default with the Bank for more than 30 days as on 01.03.2020, are eligible under the framework.

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✅ What is the Resolution Plan for personal loans?

The resolution plans may include rescheduling payments, conversion of interest accrued (or to be accrued) into another credit facility, and granting moratorium based on income streams assessment of the borrower, subject to a maximum of up to 2 years.

✅ Which loans are eligible under the Resolution Plan for Loan/Advance Customers?

The Resolution Plan is applicable to all personal loans (with some exceptions).

✅ Which types of borrowers are eligible under the Framework?

Following types of borrowers are eligible under the Resolution Framework:

  • Who have stress due to COVID-19.
  • Who are classified as standard, but are not in default with the bank for more than 30 days as on 01.03.2020.
  • Accounts should continue to be standard till the date of resolution’s invocation under this
  • The due diligence or the process for identification of stress to be followed by the bank branches/ offices to establish the importance of implementing a resolution plan.

✅ What is the Reference Date to consider the Resolution Plan?

The reference date for the outstanding debt amount that may be considered for resolution is 01.03.2020.

✅ When is the due date to invoke the Resolution Plan?

Resolution under this framework should be invoked before 31.12.2020 and must be implemented within 90 days from the invocation date.

✅ Are processing fee or other charges applicable for the borrowers who opted for the Resolution Plan?

Yes. There is a fee of 0.1% of the outstanding loan amount that is eligible for resolution (subject to minimum Rs. 1,000 & maximum Rs. 10,000). All other applicable charges will be collected as per extant guidelines.

✅ Is there any additional security that I need to provide for availing the facility under the Resolution Plan?

No. Existing securities will continue to be extended for the restructured facilities.