Process for application of loan restructuring

If you are a borrower facing difficulties in making your scheduled EMI payments because of being financially impacted by the pandemic, then fret not for we have you covered. You can now opt for the loan restructuring process and avail a moratorium or extension of loans up to two years. This process involves amending the terms and conditions of your existing personal or business loans, thereby allowing you to meet your debt obligations with ease.

Process for application of loan restructuring

As per RBIs circular, you can complete the process for loan restructuring before December 31, 2020 but it is advisable to cross-check this with your lending institution as the cut-off date may vary from organization to organization.Here is a look of at the process of application:

Step 1: Making an application: You can download an online form and submit it - after filling-in the requisite details - at the nearest branch office of the financial institution. Some institutions also provide the facility of online submission of forms.

Step 2: Evaluation of application: The lending institution will assess your application. After evaluation, you can be asked to submit the necessary documents.

Step 3: Approval/rejection of application: Once the details of your application along with the documents are verified, the financial institution will now check your repayment capacity under the requested restructuring plan. If the institution is satisfied, your application will be approved. Conversely, if your repayment capability is doubtful, or if there are any discrepancies in the submitted documents, your application can be rejected.

Step 4: Discussion and sharing of the revised terms and conditions: The financial institution will discuss the terms of restructuring with you. If you agree to go ahead with the revised plan, you can receive an updated schedule.

Things to keep in mind before applying for loan restructuring:

• Before you make an application, you must remember that merely applying for loan restructuring doesn’t mean that you will be automatically entitled to its benefits. It is only after assessing the financial impact of the pandemic on the borrower along with considering the eligibility criteria that a financial institution will agree to provide moratorium or extend the repayment schedule. Two key factors to consider while making an application are: the lender’s policy and your eligibility criteria.
• Until the process of loan restructuring has been completed, you must make your EMI payments as per the existing schedule. Remember, failure to pay EMIs before your application has been approved will be considered as default in payments. This could attract penalties such as late fines and credit reporting to bureaus etc.
• You must also keep in mind that the loan restructuring provision doesn’t provide for any extra line of credit.
• Before opting for restructuring, an individual must note that it comes with additional restructuring fee and interest rate increase. Hence, it is better to check the terms and conditions involved with your financial institutions and must be opted for only if stable finances and capability to pay exists. Hence, if one’s EMI can be paid, it would be advisable to pay it as soon as possible.

Conclusion: Thus, loan restructuring is an option to exercise for your existing personal/business loan by modifying the terms of the loan, but is only advisable in case you can afford the additional fees and interest that come with it. One can even explore liquidating lower-yield assets before considering restructuring.

If you are looking for a new personal/business loan, you can choose the trusted and reliable loan products of HDB Financial Services (HDBFS). Along with a wide range of customised loan offers, you get access to range of benefits, like quick disbursal, minimal documentation and flexible repayment tenures.