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SBI lays down norms and provisions for corporate loan restructuring under RBI framework
September, 22nd 2020

SBI has sought a minimum promoter’s contribution of 10- 15% of the loan amount in case of additional loan facilities being sanctioned.

State Bank of India (SBI) has listed the norms and provisions for the restructuring of corporate loans under the Reserve Bank of India (RBI) framework for resolution for Covid-19 related stress. The details were announced on SBI's website via a document listing Frequently Asked Questions (FAQs) for non-personal loans.

As per the document, the following relaxations are available in case of term loans - 1) Additional moratorium of up to two years for repayment of instalments of principal, 2) Extension in the tenor of the loan by up to a maximum of two years, and 3) Interest moratorium up to a maximum of six months. For working capital requirements, SBI may provide need-based additional funding which shall be repayable within five years.

SBI has also sought a minimum of 10-15% capital infusion by promoters for the additional loan facilities sanctioned. In case of unlisted entities, personal guarantee of the promoters will have to be furnished, while in case of listed companies, promoters will have to pledge their shares.

"The purpose of this framework is to provide relief to units who otherwise have a good track record, but whose operations have been adversely affected by the Covid-19 pandemic and their debt burden becoming disproportionate relative to their cash flow generation abilities," says the document.

Any additional loans will be sanctioned at 100 basis points above the current pricing of the company's loans, to offset the cost of additional provisions that the bank is required to make. A processing fee at 0.25% of the aggregate limits will be charged to corporate customers.

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