State Bank of India will seek either a personal guarantee from the promoters or a pledge of publicly traded stocks as part of its non-personal loan restructuring process.
India’s largest lender set its rules for such a restructuring on Sept. 21, which the Reserve Bank of India allowed without downgrading the loan as distressed. A list of Benchmarks were provided by a committee set up by RBI to restructure loans in individual sectors.
However, banks have also been asked to set board-level guidelines for the upcoming restructuring. In a series of frequently asked questions, SBI said that additional collateral would be required in the event of a restructuring.
The lender also said there would be an upfront processing fee of 0.25% of the total loan amount. For fixed-term loans and working capital loans, among other things, the interest cost would be increased by 100 basis points above the existing interest rate for working capital loans.
In the event of additional credit facilities, SBI will ask promoters to contribute a capital injection of 10-15% of the new sanctions. The bank also reserves the right to compensation for concessions made during the term.
The limit does not apply to personal loans and MSME borrowers with loans up to Rs 25 crore. Restructuring plans for these categories fall under separate rules, SBI said.
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