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OTR 2.0 Policy

LIC Housing Finance Limited

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Policy on Resolution Framework 2.0 for Covid-19 related stress

RBI while issuing guidelines vide Notification No. DOR.No.BP.BC/3/21.04.048/2020-21 dated 06.08.2020 provided a window under the Prudential Framework1 to enable the Lending Institutions including HFCs to implement a resolution plan in respect of eligible corporate exposures without change in ownership, and personal loans, while classifying such exposures as Standard, subject to specified conditions. Accordingly, LIC Housing Finance Limited had adopted Policy on Resolution Framework for Covid-19 related stress post its approval in the Board Meeting dated 28.09.2020. (Hereafter referred to as OTR 1.0). Later on, Operating Guidelines were issued by the Company and accordingly, One Time Restructuring was offered to eligible customers.

1Prudential Framework for Resolution of Stressed Assets) Directions 2019, dated June 7, 2019 ("Prudential Framework")

Considering that the resurgence of Covid-19 pandemic may impact the economic recovery process and create new uncertainties, RBI has come out with following notifications to alleviate the potential stress to individual borrowers and small businesses. These guidelines are applicable to Lending Institutions including HFCs.  

A.  RBI/2021-22/31 OR.STR. REC.11/21.04.048/2021-22 dated May 5, 2021 - Resolution Framework – 2.0: Resolution of Covid-19 related stress of Individuals and Small Businesses &  

B.  RBI/2021-22/32 DOR.STR.REC.12/21.04.048/ 2021-22 dated May 5, 2021 - Resolution Framework 2.0 – Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs)

 Accordingly, Policy on Resolution Framework 2.0 for Covid-19 related stress has been formulated for LIC HFL Customers.

Applicability of OTR 2.0

These policy guidelines will be applicable to the borrowers who are under stress on account of Covid-19 and who fulfil the conditions laid down under:

  • Section 1.A i.e. Basic Eligibility Criteria and
  • Section 1.B i.e. Due Diligence Criteria which contain guidelines for ascertaining whether any particular borrower has been impacted by Covid-19 or not.

Basic Eligibility Criteria

a)   Individuals who have availed Loans excluding the credit facility provided by LIC HFL to own  personnel/staff.

b)   Individuals who have availed of loans and advances for business purposes and to whom the lending institutions have aggregate exposure of not more than Rs.50 Crore as on
March 31, 2021. The borrower shall be required to provide necessary documents to the satisfaction of  LIC HFL to substantiate that aggregate exposure of all financial institutions as on 31st March 2021 is not more than Rs. 50 Crore.

c)  Small businesses, including those engaged in retail and wholesale trade, other than those classified as micro, small and medium enterprises (MSME) as on March 31, 2021, and to whom the lending institutions have aggregate exposure of not more than Rs.50 crore as on March 31, 2021. The borrower shall be required to provide necessary documents to the satisfaction of LIC HFL to substantiate that aggregate exposure of all financial institutions as on 31st March 2021 is not more than Rs. 50 Crore.

d)   Loan account should be Standard as on 31.03.2021.

e)   For loan accounts which have availed OTR 1.0, following will be the relief under OTR 2.0.
Loans where resolution plan has been implemented in terms of the OTR 1.0, and where such resolution plan either did not envisage any moratorium/extension of tenor or moratorium/extension of residual tenor permitted was less than two years, then such cases are eligible for OTR 2.0 to modify earlier resolution plan only to the extent of increasing the period of moratorium / extension of residual tenor by two years.

f)    Exposure to other HFCs would not be eligible for OTR 2.0.

Any resolution plan implemented in breach of the stipulations of this Policy shall be fully governed by the Prudential Framework for Resolution of Stressed Assets issued on June 7, 2019 (“Prudential Framework”), or the relevant instructions as applicable to specific category of lending institutions where the Prudential Framework is not applicable.

 

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