SBI Details Personal Loan Restructuring Rules

SBI will charge a 0.35% per annum additional interest for customers choosing to restructure retail loans.

A customer uses an automated teller machine (ATM) at a State Bank of India Ltd. (SBI) branch at night in Bengaluru, India. (Photographer: Karen Dias/Bloomberg)
A customer uses an automated teller machine (ATM) at a State Bank of India Ltd. (SBI) branch at night in Bengaluru, India. (Photographer: Karen Dias/Bloomberg)

State Bank of India has detailed the process and rules it intends to follow as the country’s largest lender initiates an exercise to restructure personal loans, as permitted by the Reserve Bank of India.

The bank, on Monday, launched a website where borrowers can check their eligibility and upload relevant documents. This preliminary check would be followed up by scrutiny and approval at the branch level.

According to a set of FAQs published, the bank will assess applications based on whether borrowers have lost their jobs or seen incomes reduced as a result of the Covid-19 crisis. Should customers pass that scrutiny, they may be eligible for an extension of the tenure of their loan, with a commensurate change in their equated monthly installments or EMIs.

This, however, would come at a cost.

Customers will be required to pay an additional interest of 0.35% per annum over and above current pricing for the remaining tenure of the loan, SBI said.

CS Setty, managing director at SBI, said the bank is yet to receive a large number of requests for personal loan restructuring. The bank is scaling up its outreach to ensure that borrowers come forward sooner rather than later to avail of the scheme.

When asked whether restructuring of personal loans would impact a borrower’s credit score, Setty said he was uncertain. “I can’t comment on whether credit scores would be impacted. It is a very peculiar situation. Our view is that it should not be impacted.”

Key aspects of the bank’s FAQs are replicated below:

What is the purpose of this resolution framework? 

The purpose of this framework is to provide relief to borrowers affected by the Covid-19 pandemic. 

How do I know that I am eligible for resolution under this framework? 

A borrower will be considered as affected by the Covid-19 pandemic, if any of the following conditions are fulfilled:

  1. Your salary/income in August 2020 has got reduced when compared to February 2020
  2. Reduction/suspension in salary during the lockdown period
  3. Job loss/closure of business
  4. Closure during lockdown/reduced activity of units/shops/business establishments in case of self-employed/professionals/businessmen

Which are the loans covered under this framework? 

The following loans are covered under the framework:

  1. Housing and other related loans
  2. Education loans
  3. Auto loans (other than loans for commercial use)
  4. Personal loans

Are all the loans under above categories eligible?

No. To be eligible under the framework, the following eligibility conditions need to be fulfilled:

  1. Your loan should be a “standard account” as on the date of application for relief under this framework and should have been ‘standard’ and also not in default for more than 30 days as on 01.03.2020
  2. You should have been affected by the Covid-19 pandemic and fulfil any of the conditions stated above.

How to apply for relief under above framework?

You will be able to apply online on our website ( The application will be validated by means of an OTP which you will receive on your mobile number. Alternatively, you can also visit the branch where your account is maintained and submit your application.

What are the documents to be uploaded/submitted while applying?

Copies of the following documents need to be uploaded (if applying online) or submitted along with the application form:

  1. Salary slips for the month of February 2020 and current/latest salary slip
  2. A declaration of estimated salary/income immediately after the end of the desired moratorium period (maximum 24 months)
  3. Letter of discharge from job (in case of job loss)
  4. Statements of the account where salary is credited in case of salaried employees or statement of operating account in case of businessmen/self-employed/professionals for the period February 2020 till 15 days prior to submission of application
  5. Declaration by self-employed professionals/ businessmen declaring that their business is affected by Covid-19

What are the relief/relaxations available under the framework? 

The following relief/relaxations may be sanctioned under the framework subject to compliance of bank norms:

  1. Moratorium of up to a maximum of 24 months
  2. Rescheduling of instalments and extension of tenure by a period equivalent to the moratorium granted subject to a maximum of 2 years

What is the maximum age up to which the tenor of the loan can be extended? 

This is product-specific. For example, in case of home loan, the tenure of the loan can be extended up to a maximum of 24 months or till the primary borrower attains 77 years of age, whichever is earlier. In any case, the tenure of the loan can be extended only up to maximum 24 months under this framework for Covid-19 related stress.

Whether there will be any change in EMI?

Yes. On account of moratorium granted, the tenure of your loan will be extended by the period of moratorium and the EMI payable after the moratorium will be recalculated and advised to you.

Will there be any change in pricing of my loan?

Yes, you will be required to pay additional interest of 0.35% per annum over and above your current pricing for the remaining tenure of the loan, in order to offset partial cost of additional provisions required to be made by the bank.

Whether I would be eligible for additional loan facilities under the framework? 


Can I apply for relief under this framework for more than one account?

Yes, you may apply for relief under this framework in more than one account.

How many days will the bank take to process the request?

Normally, the bank will endeavour to process your application within 7-10 working days of your submitting the application.

Up to what date can I apply for relief under the framework?

The last date to apply for relief under the framework is 24.12.2020

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