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Thursday Nov 14, 2024
Tuesday, 7 July 2020 01:09 - - {{hitsCtrl.values.hits}}
The largest private sector bank, Commercial Bank, has launched a unique payment relief scheme for both individuals and corporates to service their borrowing based on fresh cash flow post-COVID.
“Considering our customers may continue to face financial challenges at the end of the existing moratorium provided under the Central Bank COVID-19 Relief Scheme, we have come up with a host of solutions,” Commercial Bank Managing Director S. Renganathan said.
He said the new support, which comes under the newly launched ‘Arunella’ solutions portfolio, is available for home loans and personal loan customers, customers who have taken leasing facilities, credit card customers and SME borrowers.
Under the flexible payment options, at the end of moratorium period, the customers can make one-time payment of the accrued interest payable and continue to pay the existing monthly instalment. The loan repayment will be extended by the period of moratorium. An interest rebate of 20% will be considered in this instance.
Customers also have the ability to pay interest accrued separately while continuing to pay existing monthly instalments.
For EMI (Equated Monthly Instalments) based loans falling within the CBSL eligibility criteria and where the 7% per annum concessionary rate is applicable the options include a) Interest free loan for 90% of accrued interest (i.e. after allowing 10% rebate), if the repayment is within a maximum period of 24 months; b) Interest free loan for accrued interest repayable over the balance tenor of the loan and c) Accrued interest to be recovered at the end of the extended tenor of the loan.
For loans not falling within the CBSL eligibility criteria, an interest free loan for accrued interest for a maximum period of six months is provided by the bank.
Customers have the ability to convert the capital plus interest accrued during the moratorium period to a new loan. A reduction of 0.5% could be considered from the original contracted rate, said Renganathan.
For this the options include a) Repay same at an increased EMI to be paid during the rest of the original tenure of the Loan; b) Repay the total amount due at a reduced EMI over a longer tenure by extending the maturity date of the loan (based on the new employment/business income) and c) Repay the total amount due on a step up instalment basis and on reducing balance payment method (based on future expected income).
Under extended moratorium periods, Renganathan said “no capital payment” (capital moratorium) will be extended for a maximum period of six months, commencing from the expiry of the present moratorium period.
“In case of loss of employment or total loss of income, a further six months’ debt moratorium will be considered with a view to and avoid late payment interest and being classified as NPA which will negatively affect CRIB records,” he added.
Commercial Bank also offers customers a debt consolidation plan. Under this option, all facilities can be consolidated and paid over period of five years.
The customers can convert all existing loans, irrespective of short term or long term, into one term loan and arrange to have an equated or reducing balance monthly instalment (based on the new business income) and the interest accrued to be amalgamated with loan outstanding or a separate repayment could be arranged.
“If the loan capital is proposed to be settled from cash flow expected from a disposal of any asset owned by the borrower, such amount to be converted to a separate loan to be repaid from the sale of such asset within a maximum of one year. Interest on such facility should be paid if sufficient cash flows are expected. If not, loan capital together with interest accrued to be repaid from sale proceeds, within one year,” revealed the Commercial Bank Managing Director.
In terms of support for consumer/retail banking customers, Commercial Bank is offering further reduction on credit card repayments and applicable interest rates as well. Monthly minimum payment amount of credit cards will be reduced from the present 2.5% of Credit Card outstanding to 1% level for the first six months and up to 2% for the next six months.
Special interest rates (valid for the entire period and not per annum or APR) of the bank's special card repayment plan are as follows: Three and six months – interest rate for the period 2%; 12 months – interest rate for the period 6%; 18 months – interest rate for the period 9% and 24 months – interest rate for the period 12%.
Renganathan said customers already in the non-performing category and any customer whose future income is affected by COVID-19 can apply for special interest rates for reduced monthly settlement plans to settle present credit card outstanding in full.
