GCB Restructuring Policy

Citibank N.A. India

September 2020

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 1. Background

Pursuant to the guidelines rolled out by the Reserve Bank of India (RBI), vide Circular -
RBI/2020-21/16 DOR.No.BP.BC/3/21.04.048/2020-21, dated 6th Aug 2020, Sub: Resolution
Framework for COVID-19-related Stress (hereafter referred as the Restructuring Circular /
the Circular), the erstwhile approved Board policy note, is being updated to include the
following:
 Credit cards minimum amount due post moratorium
 Risk Mitigation Programs across GCB
th rd
1.1. The moratorium announced on 27 March 2020 further extended on 23 May 2020 ended on
st
31 August 2020. The moratorium construct allows interest accrual on the outstanding
balances during the moratorium period. Consequently, interest and the applicable taxes
(GST) have continued to accrue and billed to customers’ monthly statements while payments
have not been received for these balances. Specific to cards, during the moratorium, average
min due amounts for enrolled customers have swollen by 25% and the monthly enrolment of
around 180M is reflective of the financial stress faced by the borrowers, thereby creating the
need for restructuring support after the moratorium ends.

2. Restructuring circular

2.1. The economic fallout of the Covid-19 pandemic has led to significant financial stress for
borrowers. The regulator acknowledges these fallouts in the Restructuring Circular. They
have provided a special provision for payment relief to all categories of stressed borrowers,
while maintaining the asset classification as ‘Standard’.

2.2. The circular covers the conditions for the Resolution Framework for COVID-19-related Stress
and provides the approach divided into “Resolution of stress in Personal Loans” &
“Resolution of Other exposures”. The circular further covers “Asset classification and
provisioning” and “Disclosures and Credit Reporting”.

3. Applicability

3.1. The circular requires Board approved policies to be put in place for Resolution Plans for each
business.

3.2. Under the guidelines, Personal Loans include credit cards, home loans and personal loans.

4. Restructuring products proposed (Cards) :

4.1. In accordance to the Restructuring circular and its provisions, following restructuring products
are being proposed as resolution plans to provide flexibility to the stressed credit card
borrowers at the end of moratorium. (i) Realigning Credit card minimum dues & (ii) Risk
Mitigation EMI option (iii) Interest Reduction (iv) Interest Waiver
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 4.2. Realigning Credit card minimum dues:

4.3. The minimum due (min due) charged during this period (same as for the overall portfolio) is
higher of 5% of balances plus current month over limit amount and EMIs, or 1% of retail and
cash balances and current month interest, taxes, EMIs, over limit amount for a standard
account, i.e., not in default. Further, unpaid MAD from previous month needs to be included.

The accumulated amounts of interest and taxes (unpaid during the moratorium), if fully
included in the min due post moratorium, i.e., September statement, would require customers
to pay as high as 25%+ of the billed balances. Such large amounts payable in a single
tranche immediately after the moratorium would be difficult for customers and may lead to
large-scale defaults. Refer example in Annexure A.

4.4. With the objective of alleviating stress of the enrolled customers (evidenced though the
moratorium enrolments) and prevent large-scale defaults, the min due to be billed post
moratorium would continue as cited in point 4.3. It will include only current month’s billed
interest, taxes, EMIs and charges over and above a portion of principal (interest accrued
during the prior month will be added to the principal). However, it will not include the unpaid
MAD from the Moratorium period.
.
This would typically translate into 5% of the billed dues in September thereby making it
convenient for stressed customers to pay down the accumulated balances in smaller
amounts while retaining their bureau records (marked Standard per the restructuring circular).

4.5. Given the high number of such impacted customers (184M as at end Aug’20) with
outstanding amount of ~USD 278MM, the following approach is proposed to record
customer’s consent for the Resolution Plan, as required under the guidelines:.

 The communication for the restructured min due should be sent specifically to each
customer. This is proposed to be sent through (Email and SMS).
 The communication should clearly call out that if only the Minimum Amount Due is
paid, interest will continue to accrue on the outstanding balances (including
accumulated interest) and the applicable interest rates should be mentioned as well.
 In case the customers do not wish to undertake this Resolution Plan, the customers
should be provided an option for an alternate Resolution Plan or to make regular
payments.

Customer communication clearly lays down the customer implications of taking this plan. E.g.
that this will be reflected as “restructured” in credit bureau etc)

4.6. Risk mitigation Programs (RIMIT, Interest Reduction and Interest Waiver):

4.7. A COVID Risk Mitigation (RIMIT) program to assist customers in financial distress by
rescheduling payments. This program will assist customers to pay their outstanding to the
bank through a rescheduling and conversion of the outstanding (retail, cash & instalments
balances along with all charges) into an instalment loan of up to 24 months as per the
resolution framework.

When a customer takes a RIMIT loan, further unsecured facilities will be blocked and account
will be flagged as “Restructured” in the credit bureau in line with the requirements of the

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 circular. The cards will be blocked for any further usage. Bookings under this tenor extension
program are expected to be ~ USD 31 MM.

There may be customers for whom we may require a longer assistance time frame than what
the COVID resolution framework permits i.e. 24 months since they are under significant
financial distress. These customers will be offered the standard Risk mitigation programs
including Rewrites (going upto 48 months) and settlements which are outside the purview of
this Resolution Framework.

4.8. NPA and Bureau reporting: Delinquency will be measured based on the new loan payment
amount. Loss recognition occurs at 120dpd as per global policy requirement and Non-
performing asset recognition at 90 dpd. Customers that undertake the RIMIT program will be
flagged on the Credit bureau as “Restructured” in line with the requirements of this circular.
Additionally, the RIMIT program will be included for TDR provisioning for the purpose of
global reporting.

4.9. For customers who didn’t undertake the Moratorium program earlier and come back now, we
plan to address their re-structuring needs through COVID risk mitigation programs based on
exception approval (up to 5%) from Head - Collections and Head – Unsecured Policy
Approval to keep the process tight.

4.10. For COVID Risk mitigation – there will be documentation exchanged for the RIMIT through
email.

4.11. Lite Income Assessment process: The customers who have taken Moratorium have
demonstrated healthy payment trends in the past (Pre-COVID), vis-à-vis customers who have
not taken up Moratorium. Hence, we believe that the “Lite Income Assessment” will be
sufficient as these customers may be temporarily experiencing financial difficulty but have
demonstrated good payment behavior prior to COVID-19.

 Income assessment will be based on Declared income from the customer during the
telephonic conversation with the collection agent -on a recorded line. Eligibility to service
the revised EMI will then be done based on system income (taken at the time of booking
of the card) and declared income ( as mentioned in Point 1 ), whichever is lower.
 Collections Trail: Details of the customer interaction will be captured on collections
system in the form of feedback/ trail.
 Good Faith Payment: Customer to pay the first EMI as agreed in Point 3 before the
booking of the restructured plan on system - Good faith payment.
 Customer Communication: Post booking , communication will be shared with the
customer on the registered email id capturing the details of the restructured plan

5. Eligibility conditions

5.1. For Min due proposal, eligible customers will receive the relaxation. The proposal is to
continue with calculating dues at 5% of outstanding (refer point 4.3 for details).

5.2. Individuals being offered the RIMIT program, Interest Waiver and Interest Reduction belong
to the Bucket 0 & 1 as of 31st March 2020. There was no enrollment for Cards in March, so if
moratorium enrollment is the criteria, it has to be 01st April /31st March. Customers could
have made payments between start and end of moratorium as well so only latest outstanding

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 can be considered. However, credit facilities provided by the Bank to its own personnel/staff
shall not be eligible for resolution under this framework.

5.3 The key requirements and exposure expected across the key programs is as per the table
below.

Minimum Due RIMIT EMI Interest

Requirements Interest Waiver
Realignment Program Reduction
Bucket 0 and 1 Bucket 0 and 1 Bucket 0 and 1
Bucket 0 and 1
customers as of customers as of customers as of
Eligibility customers as of 31st
31st March 31st March 31st March
March 2020
2020 2020 2020
184M accounts with
Exposure
exposure of USD USD 30.9 MM USD 10.9 MM USD 9.1 MM
expected
278 MM
“Restructured”* if
payment received is
less than the amount
that would have
Bureau Status "Re-structured"
been normally due "Re-structured" "Re-structured"
(i.e. including
accumulated interest
during moratorium)
Due Diligence On Moratorium as of Detailed as per Detailed as per Detailed as per
parameters 31August, 2020 grid 5.5.1 grid 5.5.2 grid 5.5.3

* The bureau reporting as “Re-structured” is not an automated process and will require time to
allow for system build. The Proposal is to request additional time from the regulator and CCC will
be updated in this regard.

5.3 Program offering:

 Customers with 4 or 5 Months on Moratorium – RIMIT will be primarily offered to

customers who have been on the moratorium for a longer period 4/5 months. These
customers are experiencing extreme financial distress and hence such customers are likely
to take up a longer term program. The program hierarchy that will be followed for these
customers is RIMIT followed by Interest Reduction and subsequently the Interest Waiver.
 Customers with 3, 2 or 1 Month on Moratorium – Interest Reduction and Interest
Waiver: For the customers who have been on the moratorium for <=3 months, the
expectation is that they are more likely to take up the short tenor programs including the 12
month Interest rate reduction program @24% (vs. BAU APR of 42%) or the one-time
interest waiver and hence we plan to offer these programs on priority for these customers.
The program hierarchy that will be followed for these customers is Interest Reduction
followed by the Interest Waiver, and finally RIMIT.

In addition, to the RIMIT Program we are looking at an Interest rate reduction and Interest
waiver (Partial or full interest is waived for past or future payments when a customer makes
at minimum, a full principal payment) as additional programs to assist customers through
financial difficulty.

5.4 Disclosures, Reporting and Provisioning Requirements

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 All cases booked under the COVID 19 Resolution Program shall be considered and reported
as Standard till the execution of the specific Risk Mitigation program.

The Bank shall keep provisions held as per the extant IRAC norms immediately before
implementation, or 10 percent of the total debt (residual debt), whichever is higher. The Bank
shall keep these provisions from the date of implementation. Provisioning and reversals of
provisions will be undertaken in line with the RBI guidelines and based on the approach
approved by the CRO.

The credit reporting by the Bank in respect of borrowers where the resolution plan is
implemented under this facility shall reflect the “restructured” status of the account if the
resolution plan involves renegotiations that would be classified as restructuring under the
Prudential Framework.

5.5 Program Features

These programs (RIMIT, Interest Reduction and Interest Waiver) will be open between 01 Sep
until 31 December 2020.

Table 5.5.1 RIMIT EMI Program

Criteria RIMIT EMI Program
Tenor (Maximum) Capped to 24 months as per Resolution framework
Delinquent Bucket
Bucket 0 and 1 customers as of 31st March 2020
(customer level)
Interest Rate Up to 12%
Card Block Permanent Block
Delinquency will be measured based on the new loan payment amount.
Write off Logic Loss recognition occurs at 120dpd. Non Accrual at 90 dpd.

Bureau reporting for RIMIT to take place as “Re-structured”(For New

Bureau Update
Cards) & Null for Old card
EMI Over balance > 2.5%. Systemic check in place for EMI to cover at
Minimum Installment least 50% of the Original (At the time of RIMIT booking) Min Due
payment of the customer.
Yes, once the customer completes the payment on the RIMIT EMI
Fresh Plastic
program in full, he will be re-assessed for a fresh plastic issuance based
Issuance
on fresh under-writing
Good Faith Payment Yes
Rewrite History No prior Rewrite History
Principal Waiver Not Allowed

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Table 5.5.2 Interest Reduction Program

Criteria Interest Reduction

Tenor (Maximum) Capped to 12 months as per Resolution framework
Delinquent Bucket
Bucket 0 and 1 customers as of 31st March 2020
(customer level)
Interest Rate Up to 24%
Card Block Temporary Block
Write off Logic Loss recognition occurs at 180dpd. Non Accrual at 90 dpd.
Bureau Update "Re-structured"
Payment Required 5% Minimum Due payment based on 24% APR
Good faith payment in the form of min due will be collected at the time
Good Faith Payment
of enrollment

Table 5.5.3 Interest Waiver Program

Criteria Interest Waiver

Number of months
Capped at 1 month's interest for 1 month min due payment
Interest Waiver
Delinquent Bucket
Bucket 0 and 1 customers as of 31st March 2020
(customer level)
Card Block No Temporary Block applicable
Write off Logic Loss recognition occurs at 180dpd. Non-Accrual at 90 dpd.
Bureau Update "Re-structured"
Payment Required 5% Minimum Due payment
Good faith payment in the form of min due will be collected at the
Good Faith Payment
time of enrollment

6. Restructuring products proposed (PIL & Ready Credit) :

Personal loans and Ready Credit are included within the product Personal loans as per the
XBRL Returns Harmonization of banking statistics, point 1, Annex 1 (Page 1) (Refer detailed
definition on page 13/14).
However, for personal loans the typical loan is a longer tenor typically a 48 month loan with
higher loan amounts (Average loan outstanding on moratorium of ~INR 400M). Hence, these
customers are expected to require a longer assistance time frame than what the COVID
resolution framework permits i.e 24 months since they are under significant financial distress.

Ready Credit is a significantly small portfolio with an ENR of USD 62MM and has limited
customers on the moratorium.

Therefore, we propose to address these re-structuring needs of the PIL and Ready Credit
customers Rewrites (going up to 24 months). These programs in our view will help ease
payments for customers experiencing financial distress.

However, credit facilities provided by the Bank to its own personnel/staff shall not be eligible
for resolution under this framework.

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 All cases booked under the COVID 19 Resolution Program shall be considered and reported
as Standard till the execution of the specific Risk Mitigation program.

The Bank shall keep provisions held as per the extant IRAC norms immediately before
implementation, or 10 percent of the total debt (residual debt), whichever is higher. The Bank
shall keep these provisions from the date of implementation. Provisioning and reversals of
provisions will be undertaken in line with the RBI guidelines and based on the approach
approved by the CRO.

The credit reporting by the Bank in respect of borrowers where the resolution plan is
implemented under this facility shall reflect the “restructured” status of the account if the
resolution plan involves renegotiations that would be classified as restructuring under the
Prudential Framework.

7. Governance Framework: The Unsecured business shall constitute a review group, as below
to review the Risk mitigation volumes, take up and performance (as applicable) and track
versus the planned estimates with a weekly cadence. Data for this shall be provided by the
Collections team, for the Group’s review, every week.
Interest Interest
Estimated Booking RIMIT TOTAL
Reduction Waiver
# Take up Cap Over the
Program across all 13517 8001 7766 29284
months (Total)
% Bookings (#) 60% 20% 20% 100%
$ Bookings Cap Over the
Program (Total) 30.9 10.9 9.1 50.9
% Bookings ($) 61% 21% 18% 100%

The review group will review this MIS every week and will be empowered to place temporary
holds, on further bookings on any programme. Ratification shall be sought at the levels of
25% (Level 1), 65% (Level 2) and up 100% (Level 3), where these %’s represent the total
take up under the programme.

Collections to share a weekly tracker including program wise take up and overall
Collections portfolio and productivity metrics including Flow rates, GCL, Promise and
Kept rates.

Review Group: The review group as defined below

1. Shall receive weekly MIS
2. Designated individuals shall ratify the continuance, as per the levels above

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 Designation Name
Cards and Unsecured Lending Mr. Arjun Chowdhry (65-100%)
Business Head
Consumer Operations Head Mr. Arvind Singla (65-100%)
Consumer Risk Head TBD as replacement hiring
underway (65-100%)
Unsecured Risk Head Ms. Simran Khanna (Up to 65%)
Unsecured Collection Head Mr. Sandeep Jain (Up to 65%)
Cards Portfolio and Rewards Mr. Prashant Sinha (Up to 65%)
Head
Cards, PIL and RC Business Mr. Saurabh Vadhera (Up to
Head 65%)

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8. Restructuring products proposed (Mortgage) :

8.1 Background:

The RBI Circular covers the conditions for the Resolution Framework for COVID-19-related
stressed accounts and categorises them under “Resolution of stress in Personal Loans” &
“Resolution of Other exposures”. The Circular further covers “Asset classification and
provisioning” and “Disclosures and Credit Reporting” of loans under the framework.

Mortgage Business offers a suite of Risk Mitigation programs which are designed to address
customer’s financial stress both in the short term and long term. These rehabilitation
programs include Forbearance, Extension and Rewrite.

The short term programs in the above suite of programs is being considered for the purpose
of Covid 19 Stress Resolution Framework as per RBI Circular.

8.2 Eligibility and Application:

The above mentioned COVID 19 resolution framework shall be applicable for Individual
borrowers who have taken a Home Loan (Salaried and Self Employed) or a Cash out
(Salaried) Loan for personal use and subsequently availed of the Moratorium Relief Program.

For all Mortgage MSME borrowers, policy under the MSME circular (RBI/2020-21/17
th
DOR.No.BP.BC/4/21.04.048/2020-21 dated 6 Aug 2020) would be applicable and would be
covered under the existing Prudential Framework.

Customers outside the above two categories, who approach the Bank for rehabilitation would
be covered under the existing Prudential Framework.

However, credit facilities provided by the Bank to its own personnel/staff shall not be eligible
for resolution under this framework.

Furthermore any exposure of the Bank to Financial Service providers shall be outside the
purview of the resolution framework. Financial Service Provider is defined under Section
3(16) and 3(17) of the Insolvency and Bankruptcy Act 2016.

8.3 Resolution Process:

The eligible borrowers’ accounts shall continue to be classified as Standard till the date of
invocation of resolution under this framework. For this purpose, the date of invocation shall
be the date on which both the borrower and the Bank have agreed to proceed with a
resolution plan under this framework.

The last date of invocation of resolution plan under the framework shall be December 31st
2020 and the plan has to be implemented no later than 90 days from the date of invocation.

The resolution under the framework, as suggested by RBI, shall be executed using the suite
of short-term (maximum 24 months) Risk Mitigation programs approved by the Bank.
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 8.4 Restructuring Programs Proposed:

Mortgage Business offers a suite of Risk Mitigation programs which are designed to address
customer’s financial stress both in short term and long term. These rehabilitation programs
include Forbearance, Extension and Rewrite.

For the purpose of compliance to the COVID 19 Stress Resolution Framework, following
Short Term programs (maximum 24 months) may be offered to the stressed customers
requiring restructuring:

1. Forbearance: Reduction of APR to reduce EMIs by maximum 50% over a period of 24

months.

Criteria Forbearance Program

- Individual borrowers who have taken a Home Loan (Salaried and
Self Employed) or a Cash out (Salaried) Loan and subsequently
availed of the COVID 19 Moratorium Relief Program.
Target Customers - Month on books ( MOB ) >=12 months
- Time till maturity –for the loan account on which forbearance is
done- should be at least 2 years
- Accounts which have been rehabilitated before are NOT eligible.
st
- Customers cannot more than 30 days past due as on 1 March
Delinquency 2020.

- Maximum relief period to be 24months. No extensions/repricing

Relief Period
allowed within this period
- Max allowed tenor extension is 10 years
Tenor Extension - Max end-to-end tenor permitted will be 25 / 20 years for Home
loans / PPTL respectively
- During the relief period monthly repayment to be reduced; however
it must be > monthly interest being charged to ensure that the loan
EMI reduction is amortizing during the relief period.
- Min 10% / Max 50% reduction from current EMI levels.
- Fresh valuation needs to be done
- CIBIL Bureau report to be pulled for review by approver.
Review and - Portfolio Risk Head to approve all forbearance basis
Approval Process recommendation from RCM
- Any waiver of principal and interest to be approved by Country
Credit Director/Portfolio Risk Head as per delegation.
- Interest rate to be lowered for the forbearance period.
Pricing - This will require specific approval from Portfolio Risk Head (up to
2%) and Business Manager/Country Credit Director (> 2%).
- Any exception to above to be approved by Country Credit Director
Exception
only

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 2. Extension: Tenor extension of 1 month (Maximum 4 times during the tenor of loan)

Criteria Tenor extension of 1 month

- Individual borrowers who have taken a Home Loan (Salaried and Self
Target Employed) or a Cash out (Salaried) Loan and subsequently availed of the
Customers COVID 19 Moratorium Relief Program.
- Loan to be minimum 12 month in existence
Delinquency - Customers cannot more than 30 days past due as on 1st March 2020.
- Two Tenor extensions should be at least 12 months apart
Extension Period - Maximum Tenor extension at any point of time - 1 Month
- Maximum 4 months extension during the life of the loan
EMI Unchanged
- Interest outstanding, Bounce cheque charges and penal interest to
Accounting be waived & Principal to remain part of the balance
- Pricing will remain unchanged
Non Accrual /
- Non-Accrual and Write off as per policy
Write off
Approval - Portfolio Risk Head / Country Credit Director post concurrence from
Authority Regional Risk
Documentation - NACH/SI mandate to be replenished
Exception - Any exception to above to be approved by Country Credit Director only

Long Term and other Programs (outside the purview of Covid-19 stress Resolution
framework but falling under Prudential Framework)

1. Rewrites: Rewrite is a workout solution to be offered only to the customers facing

difficulty in repaying the original EMI. It refers to creating a new loan from an existing
open or closed-end loan (whether current or delinquent) that significantly changes the
original terms and conditions, including EMI, interest rate and tenor.

Compromise settlement are not allowed and excluded from the resolution plan framework.

8.5 Proposed Process of execution:

Customers who approach the Bank for rehabilitation under the RBI Resolution Framework
shall be assessed on applicability and eligibility based on the internal policies and processes
of the Bank.
The Collection team along with the Credit Initiation team shall jointly appraise the financial
situation of the customer and recommend the specific short term or long-term Risk Mitigation
program for rehabilitation.
The invocation shall be completed within 31st December 2020 and execution shall happen
within maximum 90 days from date of invocation.

8.6 Reporting and Provisioning requirements (Local GAAP and Bureau):

All cases booked under the COVID 19 Resolution Program (Under Extension or
Forbearance) shall have a newly created product code for the purpose of tracking and
reporting.

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 All such cases shall be considered and reported as Standard till the execution of the specific
Risk Mitigation program.
Post execution of the program, the cases under COVID 19 Resolution Program shall be
reported as Restructured Accounts in the Credit Bureaus.
The Bank shall keep appropriate provisions held as per the extant IRAC norms prior to the
execution of the resolution plan or 10 percent of the total debt (residual debt) whichever is
higher. Provisioning and reversals of provisions will be undertaken in line with the RBI
guidelines and based on the approach approved by the CRO.
The Bank shall keep these provisions from the date of implementation.

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9. Restructuring products proposed (ABF):

9.1 The policy shall be applicable to borrowers who are classified as Standard, but not in
default for more than 30 dpd as on March 1, 2020 and continue to remain standard till the
date of invocation of the resolution plan.

The following categories shall not be eligible for a resolution plan under this policy:
 MSME borrowers whose aggregate exposure to lending institutions collectively,
is INR 25 crore or less as on March 1, 2020.
 Farm credit as listed in Paragraph 6.1 of Master Direction
FIDD.CO.Plan.1/04.09.01/ 2016-17 dated July 7, 2016.

For these borrowers policy under the MSME circular would be applicable.
The borrower would be required to submit an application via written communication to the
bank stating their current outstanding, exact details of the request and detailed rationale.
The invocation of the scheme shall be completed by December 31, 2020.

9.2 The ABF business shall constitute a standing committee as below to review the
application in a timely manner. Minimum of three individuals, one of which would be from
Risk unit at a minimum, would be required to complete the quorum.

Standing Committee

Designation Name
ABF Business Head Mr. Rohit Ranjan
ABF Risk Head Mr. Arun Jain
ABF Collection Head Mr. Manzoor Ahmed
ABF Collection Strategy Mr. Manish Agarwal
Zonal Risk Manager Respective for the region
Zonal Collection Head Respective for the region

The collections unit shall coordinate the restructuring proposal and present to the
standing committee.
The bank shall have the right to accept or reject an application based on the merits of
each application. The bank is not bound to accept every application.
The restructuring plan may include rescheduling of payments / granting of moratorium,
based on an assessment of cash flows of the borrower by the standing committee,
subject to a maximum of two years. The overall tenor of the loan would accordingly, get
extended

9.3 Asset Classification and Provisioning

 If a resolution plan is implemented in adherence to the provisions of this policy, the

asset classification of borrowers’ accounts classified as Standard shall be retained as
such upon implementation, whereas the borrowers’ accounts which may have slipped
into NPA between invocation and implementation may be upgraded as Standard, as
on the date of implementation of the plan.
 The credit reporting by the Bank in respect of borrowers where the resolution plan is
implemented under this facility shall reflect the “restructured” status of the account if

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 the resolution plan involves renegotiations that would be classified as restructuring
under the Prudential Framework.
 The Bank shall keep provisions held as per the extant IRAC norms immediately
before implementation, or 10 percent of the total debt (residual debt), whichever is
higher. The Bank shall keep these provisions from the date of implementation.
 The additional provisions maintained, if any, by the Bank in terms of the circular
DOR.No.BP.BC.63/21.04.048/2019-20 dated April 17, 2020 in respect of such
borrowers, to the extent not already reversed, may be utilised for meeting the
provision requirements in all cases under this Policy.
 Reversal of Provisions: Half of the provisions may be reversed upon repayment of 20
percent of the carrying debt, the other half may be reversed upon repayment of another
10 per cent of the carrying debt without slipping into NPA subsequently. Provisioning and
reversals of provisions will be undertaken in line with the RBI guidelines and based on
the approach approved by the CRO.

9.4 Other Considerations

 Accounts which do not fulfill the required eligibility conditions for resolution under this
policy, shall be considered for resolution under the Prudential Framework.

If any of the timelines stipulated in the circular are breached at any point, the resolution
process shall cease to apply immediately in respect of the borrower concerned and shall
be fully governed by the Prudential Framework.

9.5 Exception approval

Any exception to the above proposed policy shall require approval from Country CRO
and relevant Business Head.

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Annexure A

RBI - Resolution
Framework for COVID-19-related Stress.pdf

Annexure B
Conditions for the Resolution Framework for COVID-19-related Stress – Point 1

“1. The framework shall be applicable to eligible borrowers – corporate persons or otherwise
– subject to the conditions specified herein. Part A of this Annex pertains to requirements
specific to resolution of personal loans and Part B pertains to resolution of other eligible
borrowers.”

Conditions for the Resolution Framework for COVID-19-related Stress – Point 3

“3. The lending institutions shall frame Board approved policies pertaining to implementation
of viable resolution plans for eligible borrowers under this framework, ensuring that the
resolution under this facility is provided only to the borrowers having stress on account of
Covid19. The Board approved policy shall, inter alia, detail the eligibility of borrowers in
respect of whom the lending institutions may be willing to consider the resolution, and shall
lay down the due diligence considerations to be followed by the lending institutions to
establish the necessity of implementing a resolution plan in respect of the concerned
borrower.”

A. Resolution of Stress in Personal Loans* – Point 9

“9. The resolution plans may inter alia include rescheduling of payments, conversion of any
interest accrued, or to be accrued, into another credit facility, or, granting of moratorium,
based on an assessment of income streams of the borrower, subject to a maximum of two
years. Correspondingly, the overall tenor of the loan may also get modified commensurately.
The moratorium period, if granted, shall come into force immediately upon implementation of
the resolution plan.”

*Personal loan are defined in the XBRL Returns Harmonization of banking statistics, point 1,
Annex 1 (Page 2 ) including Credit Cards and Personal Loans. Refer excerpt below.

Srl. Data Element Harmonised Definition

1 Consumer Consumer credit refers to the loans given to individuals, which consists of
Credit (a) loans for consumer durables, (b) credit card receivables, (c) auto
loans (other than loans for commercial use), (d) personal loans secured
by gold, gold jewellery, immovable property, fixed deposits (including
FCNR(B)), shares and bonds, etc., (other than for business / commercial
purposes), (e) personal loans to professionals (excluding loans for
business purposes), and (f) loans given for other consumptions purposes
(e.g., social ceremonies, etc.). However, it excludes (a) education loans,
(b) loans given for creation/ enhancement of immovable assets (e.g.,
housing, etc.), (c) loans given for investment in financial assets (shares,
debentures, etc.), and (d) consumption loans given to farmers under
KCC. For risk weighting purposes under the Capital Adequacy
Framework, the extant regulatory guidelines will be applicable.
2 Personal loans Personal loans refers to loans given to individuals and consist of (a)
consumer credit, (b) education loan, (c) loans given for creation/
enhancement of immovable assets (e.g., housing, etc.), and (d) loans
given for investment in financial assets (shares, debentures, etc.).

16 | P a g e September-2020

Created date: 09-06-2021

 Resolution Framework for COVID-19-related Stress – Point 7
“The eligible borrowers’ accounts should continue to be classified as Standard till the date of
invocation of resolution under this framework. For this purpose, the date of invocation shall
be the date on which both the borrower and lending institution have agreed to proceed with a
resolution plan under this framework.”

Resolution Framework for COVID-19-related Stress – Point 10

“The resolution plan shall be deemed to be implemented only if all of the following conditions
are met: a. all related documentation, including execution of necessary agreements between
lending institutions and borrower and collaterals provided, if any, are completed by the
lenders concerned in consonance with the resolution plan being implemented;

b. the changes in the terms of conditions of the loans get duly reflected in the books of the
lending institutions; and,

c. borrower is not in default with the lending institution as per the revised terms.”

Resolution Framework for COVID-19-related Stress – Point 5

“5. Accounts which do not fulfil the required eligibility conditions to be considered for
resolution under this framework may continue to be considered for resolution under the
Prudential Framework, or the relevant instructions as applicable to specific category of
lending institutions where the Prudential Framework is not applicable.”

Prudential Norms Applicable to Restructuring – Annex 1, Point1

“1.Restructuring is an act in which a lender, for economic or legal reasons relating to the
borrower's financial difficulty, grants concessions to the borrower. Restructuring may involve
modification of terms of the advances / securities, which would generally include, among
others, alteration of payment period / payable amount / the amount of instalments / rate of
interest; roll over of credit facilities; sanction of additional credit facility/ release of additional
funds for an account in default to aid curing of default / enhancement of existing credit limits;
compromise settlements where time for payment of settlement amount exceeds three
months.”

17 | P a g e September-2020

Created date: 09-06-2021