A. Background:

Nahar Credits Private Limited (hereinafter referred to as “the Company” or “NBFC” or “Lender”) is a private limited company incorporated under the provisions of the Companies Act, 1956 and registered as a non-deposit accepting Non-Banking Financial Company (“NBFC”) with the Reserve Bank of India (“RBI”).

The RBI on August 06, 2020, vide its circular no. RBI/2020-21/16 DOR. No. BP. BC/3/21.04.048/2020-21 has released guidelines for NBFCs on implementation of resolution framework for COVID-19 related stress.

Earlier on June 07, 2019, the RBI had issued directions on Prudential Framework for Resolution of Stressed Assets commonly referred to as RBI (Prudential Framework for Resolution of Stressed Assets) Directions 2019 (“Prudential Framework”), which provides a principle-based resolution framework for addressing borrower defaults under a normal scenario.

However, the economic fallout on account of the COVID-19 pandemic has led to significant financial stress for borrowers nationwide and the resultant stress can potentially impact the long-term viability of many Companies, otherwise having a good track record, due to their debt burden becoming disproportionate relative to their cash flow generation abilities.

Considering the above, the RBI provided a window that enabled the lenders to provide a resolution framework to the eligible borrowers for repayment of their loan by way of restructuring the loan or extending the tenure for repayment of the debt.

B. Objective of the Policy:

The objective of the Policy is to facilitate the overall revival of the economy in the long run, and to save the Company from having an impact on its financial stability risks due to its debt burden becoming disproportionate relative to its cash flow generation abilities by implementing resolution plans for the eligible borrowers.

C. Definitions:

For the purposes of this policy, the below terms shall have the meaning as provided hereinunder:

a) Board: The Board shall mean the Board of Directors or any authorized committee(s) of the board of the Company.
b) COVID-19: Coronavirus Disease or COVID-19 is an infectious disease, which was declared as a global pandemic by World Health Organization on 11 March 2020.
c) Consumer credit: It refers to the loans given to individuals, which consists of (i) loans for consumer durables, (ii) credit card receivables, (iii) auto loans (other than loans for commercial use), (iv) personal loans secured by gold, gold jewellery, immovable property, fixed deposits (including FCNR(B)), shares and bonds, etc., (other than for business / commercial purposes), (v) personal loans to professionals (excluding loans for business purposes), and (vi) loans given for other consumptions purposes (e.g., social ceremonies, etc.). However, it excludes (i) education loans, (ii) loans given for creation/ enhancement of immovable assets (e.g., housing, etc.), (iii) loans given for investment in financial assets (shares, debentures, etc.), and (iv) consumption loans given to farmers under KCC. For risk weighting purposes under the Capital Adequacy Framework, the extant regulatory guidelines will be applicable.
d) Date of Invocation: The date of invocation means the date on which both the borrower and lender have agreed to proceed with a resolution plan for the Eligible Borrower in terms of this Policy. However, in no case the Date of Invocation be later than December 31, 2020.
e) Eligible Borrower/s: For the purpose of resolution plan under this Policy, eligible borrower shall mean

      • the borrowers whose accounts were not in default for more than 30 (thirty) days with the Company as on March 01, 2020 and were classified as standard assets; and
      • the borrowers having stress on account of COVID-19; and in respect of whom the Company is willing to consider the resolution under this Policy.

f) Non-Eligible Borrower/s: Non-Eligible Borrowers shall mean the personnel or staff of the Company to whom it has extended credit facility or personal loans.
g) Personal Loans: Personal loans refers to loans given to individuals and consist of (i) consumer credit, (ii) education loan, (iii) loans given for creation/ enhancement of immovable assets (e.g., housing, etc.), and (iv) loans given for investment in financial assets (shares, debentures, etc.).
h) Standard Assets: Standard asset shall mean the asset in respect of which, no default in repayment of principal or payment of interest is perceived and which does not disclose any problem or carry more than normal risk attached to the business.

D. Eligibility for resolution under this Policy:

The Company shall take into consideration only the Eligible Borrowers for the purpose of considering and implementing the resolution plans. However, it is necessary that the Eligible Borrowers account is classified as Standard Asset as on the Date of Invocation.

Keeping in view the RBI guidelines issued from time to time, the Board will consider and provide suitable resolution/restructuring plans for the Eligible Borrowers as mentioned in Annexure 1.

    • Timelines for resolution

The resolution plan for the Eligible Borrower account under this Policy shall be invoked latest by December 31, 2020 and must be implemented within 90 (Ninety) days from the Date of Invocation.

    • Implementation of resolution (also known as “Date of Implementation”)

A restructuring of loan would be treated as implemented upon fulfilment of all of the following conditions:

a)All related documentation, including execution of necessary agreement(s), if any, between Lender and Eligible Borrower are completed;
b) The new loan amount and/ changes in the terms and conditions of the existing loan account get duly reflected in the books of accounts of the Lender
c) The Eligible Borrower is not in default with the Lender as per the revised terms and conditions.

E. Due Diligence Process

The Company on receipt of a request from the Eligible Borrower, shall evaluate the proposal for restructuring of the personal loan account(s). The request application shall be required to be submitted by the Eligible Borrowers along with the requisite supporting documents, which may vary from case to case to review the application.

On due evaluation of the documents submitted by the Eligible Borrower, the concerned team of the Lender shall execute with the Eligible Borrower necessary amendment agreement or other necessary documents in order to record the revised terms and implement viable resolution plan(s) as provided in Annexure 2.

 F. Prudential Norms:

    • Disclosure in the Financial Statement: The Company shall make appropriate disclosures about the restructured accounts in terms of this Policy in its annual financial statements under the “Notes to Accounts”.
    • Credit Reporting by the Company: The restructuring of loan granted to the Eligible Borrowers under this Policy will be treated as new restructured loan account and the credit history of the Eligible Borrowers shall consequently be governed by the respective policies of the credit information companies as applicable to accounts that are restructured.

G. Miscellaneous:

    1. Display on Website: The Board approved policy on restructuring of stressed assets will be hosted on the Company’s website for our customers information and benefit.
    2. Effective date: This Policy shall be effective from the date of approval of this Policy by the Board.
    3. Review of Policy: The Policy shall be reviewed as and when required by the applicable rules and regulations.
    4. While Policy outlines the broad internal guidance that the Company will follow to take decisions regarding this restructuring of stressed assets/loan, the Company retains the discretion to take decisions regarding this Policy depending on case specific issues or nuances. The Company reserves the right to amend the Policy within the framework of RBI guidelines.

For Nahar Credits Private Limited
Sd/-
Director

Annexure – 1

1. Customers in Arrears (<30 DPD as of 1st Mar 2020)*

1.1 Loan will be in <30DPD bucket ONLY
1.2 The main criteria for determining eligibility is based on customers ability to pay and intention to pay as determined by the stressed FOIR calculation and A2E score as per the grid below.
1.3 Residual tenure should be 2 or more months.
1.4 At least 1 EMI paid on the original loan, thus excluding non-starters.
1.5 Principal due should be greater than INR 2000.
1.6 Existing EMI should be greater than INR 500.

* As per RBI guidelines on Resolution Framework for COVID-19-related Stress released on 6th August 2020

Stress FOIR Bands (35% Stress Income)
A2E Risk Band <30% 30%-60% 60%-120% 120%-300% 300%-600% 600%+
High Regular Payment / Prepay Regular Payment / Prepay Hard Restructure Hard Restructure Hard Restructure No Restructure
Medium Regular Payment / Prepay Regular Payment / Prepay Soft Restructure Hard Restructure Hard Restructure No Restructure
Low Regular Payment / Prepay Regular Payment / Prepay Soft Restructure Soft Restructure Soft Restructure Soft Restructure
(blank) Regular Payment / Prepay Regular Payment / Prepay Hard Restructure Hard Restructure Hard Restructure No Restructure

2. Customers that have expressed interest in restructuring through the CS channel:

2.1 Loan will be in <30DPD bucket ONLY
2.2 Residual tenure should be 2 or more months.
2.3 At least 1 EMI paid on the original loan, thus excluding non-starters.
2.4 Principal due should be greater than INR 2000.
2.5 Existing EMI should be greater than INR 500.
2.6 Further eligibility to be evaluated by the Company based on relevant documents/evidence of COVID-19 related financial distress provided by the customer.

3. Distressed Pre-DPD Customers segment:

3.1. The main criteria for determining eligibility is based on customers ability to pay and intention to pay as determined by the stressed FOIR calculation and A2E score. Refer to the colour coded grid below.
3.2. Loan is NOT IN DPD.
3.3. Residual tenure should be 2 or more months.
3.4. At least 1 EMI paid on the original loan, thus excluding non-starters.
3.5. Principal due should be greater than INR 2000.
3.6. Existing EMI should be greater than INR 500.
3.7. Loans from collections’ Risk Segment 7, 8 & 9 will only be eligible under this.

Stress FOIR Bands (35% Stress Income)
A2E Risk Band <30% 30%-60% 60%-120% 120%-300% 300%-600% 600%+
High Regular Payment / Prepay Regular Payment / Prepay Hard Restructure Hard Restructure Hard Restructure No Restructure
Medium Regular Payment / Prepay Regular Payment / Prepay Soft Restructure Hard Restructure Hard Restructure No Restructure
Low Regular Payment / Prepay Regular Payment / Prepay Soft Restructure Soft Restructure Soft Restructure Soft Restructure
(blank) Regular Payment / Prepay Regular Payment / Prepay Hard Restructure Hard Restructure Hard Restructure No Restructure

Annexure 2

Proposed Restructuring Terms

1. Revision in interest rate:

Same as the existing loan.

2. Revision in Tenure

a) Hard Restructuring:

i. Revised tenure of restructured loan = 1.5 x residual tenure (rounded to the nearest month)
Min incremental tenure offered from 4 months
Max incremental tenure offered upto 6 Months, basis the Tenure table

b) Soft Restructuring:

i. Revised tenure of restructured loan = 1.9 x residual tenure (rounded to the nearest month)
Min incremental tenure offered from 6 months
Max incremental tenure offered upto 9 Months

c) For customers coming via CS/ Collections

i. To be same as hard restructuring

3. Processing Fee – to be paid upfront (Same as Phase I)

a. If Principal Outstanding <= INR 10,000; then INR 125
b. If Principal Outstanding > INR 10,000 <= 50000; then INR 250
c. If Principal Outstanding > INR 50,000; then INR 500