What Is The Difference Between Loan Rescheduling And Loan Restructuring?

How do you restructure a loan?

The loan restructuring option can be availed only if you failed to repay your EMIs due to a loss of job or income necessitated by the Covid-19 pandemic.

Loan restructuring may be subject to additional charges, and though it may lower your EMIs, you will have to pay more interest due to the increased tenure..

What does loan restructure mean?

Restructuring is a practice that allows banks to modify the terms of the loan when the borrower is facing financial stress. … If a loan account is classified as an NPA, then banks will have to set aside money—provisions—towards it.

What does it mean to reschedule a loan?

Rescheduled Loan A loan made to a borrower where the lender has extended the repayment period. Rescheduled loans are most common when the borrower informs the lender that he/she will be unable to repay the loan in time, or when the borrower cannot afford payments.

Does restructuring a loan affect your credit rating?

Impact on Credit Score For example, the loans taken up for restructuring could be reflected in credit reports as ‘restructured’, which may affect your CIBIL score. Hence, your chances of availing another loan or credit card may be affected in the future if you opt for the restructuring.

What is the difference between refinancing and restructuring?

Key Takeaways. Debt restructuring is used when a borrower is under such financial distress that it prevents timely repayment on a loan. Debt refinancing is used on a much broader basis than restructuring, in which a borrower leverages a newly obtained loan with better terms to pay off a previous loan.

How do I restructure a loan?

To be eligible for loan restructuring, the basic requirements are as follows:The applicant’s loan account must have no dues pending as on Mar 01, 2020 or dues overdue for less than 30 days (89 days for MSME customers).The applicant’s income should have been impacted as a result of the COVID-19 pandemic.More items…