FAQs on Restructuring 2.0 Scheme of RBI: RBI introduced its Loan Restructuring Scheme 2.0 for all the accounts classified as standard as of April 1, 2021. To help individuals and entities deal with the financial crisis that occurred due to the pandemic, RBI introduced this scheme. COVID-19 came as an unexpected hit for the country. Many borrowers were affected due to job loss, business closures, and economic slowdowns.
When the moratorium period ended after the second wave, many borrowers were still struggling to manage funds and repay their loans. This is when RBI announced its second framework in May 2021, the Loan Restructuring 2.0 Scheme, which included benefits for individual borrowers as well as entities.
Table of contents
- What is the Restructuring 2.0 Scheme of RBI?
- What are the key features of this restructuring scheme?
- Who is eligible for Loan Restructuring 2.0?
- Can I apply for loan restructuring more than once?
- What type of loans can be restructured under this scheme?
- What types of loans are not eligible for restructuring?
- What are the documents required for loan structuring 2.0?
- How can I apply for loan restructuring?
- Is there any deadline for availing restructuring under this scheme?
- What are the benefits of loan restructuring?
- Is there any impact on the CIBIL scores due to loan restructuring 2.0?
- Should I hold my Credit Card payments during the moratorium extension period?
- What precautions should be taken before availing loan structuring?
- Can I restructure my education loan?
What is the Restructuring 2.0 Scheme of RBI?
The RBI Restructuring 2.0 Scheme allows financial institutions to restructure loans of individuals or entities impacted by the COVID-19 pandemic. It allows them to negotiate the loan repayment terms and ask to lower the interest rates, increase the repayment tenure, or other flexible repayment options during the arrangement.
What are the key features of this restructuring scheme?
The key features include allowing a moratorium period of up to 2 years, extending loan tenures, or granting a reduction in EMIs. These measures aim to ease the financial burden on affected borrowers.
Note: An inactive or defaulter loan account is not eligible for this scheme and only standard accounts will be considered.
Who is eligible for Loan Restructuring 2.0?
As per the Restructuring 2.0 Scheme of RBI, loan accounts that are classified as ‘Standard’ are eligible for restructuring. It means that only borrowers who are paying actively and making regular payments can avail of this facility. Any account declared as a sub-standard asset or Non-Performing Asset (NPA) is not eligible.
Can I apply for loan restructuring more than once?
An individual who has previously applied for loan restructuring can apply for this scheme. The only requirement is that the loan tenure extension must not exceed 24 months.
However, MSMEs that have already applied for a loan restructuring framework are not eligible for this scheme.
What type of loans can be restructured under this scheme?
Almost all types of loans are covered under this scheme including retail loans, corporate loans, education loans, SME loans, housing loans etc. However, you must meet the RBI-specified criteria.
Also Read: Already having an existing education loan but still falling short of funds? Worry not, you can get a Top-up on your Education Loan. Read this blog to know all about Top-Up Education Loans for Specialised Programs: Process, Eligibility, Repayment
What types of loans are not eligible for restructuring?
Loans to individuals or entities for agricultural purposes are not eligible for restructuring. Loans provided to finance service providers, agricultural credit societies, and local, state, and central government are also not eligible for loan restructuring.
What are the documents required for loan structuring 2.0?
To be eligible for loan restructuring under the 2.0 scheme of RBI, you must show valid documents to prove financial distress due to COVID-19. The following documents required are–
- Salary Slips for March 2021 and the last 2 months’ salary slips
- Letter of discharge (in case of job loss)
- GST Returns from Oct 2020 till present date
- Income Tax Returns
- Declaration by self-employed professionals that their business was affected by Covid-19.
- Balance sheet / Profit and Loss Statement for the last 2 years
How can I apply for loan restructuring?
To apply for loan restructuring, follow these steps-
- Visit the lender’s website and fill out the application form
- Submit the required documents
- After applying, you will receive a confirmation email/SMS.
- The lender will appoint a Relationship Manager who will contact you to negotiate the terms of repayment.
- After the approval, you can start paying back your loan according to the new terms.
Is there any deadline for availing restructuring under this scheme?
The RBI announced a limited window for banks to implement restructuring under this scheme. Borrowers should inquire with their banks to determine the deadline for applying for restructuring.
What are the benefits of loan restructuring?
Under the Restructuring 2.0 Scheme of RBI, you can extend your loan tenure and negotiate the interest rates with your lender. It can help you avoid making default payments in future.
Is there any impact on the CIBIL scores due to loan restructuring 2.0?
Yes. You may observe the impact on your credit scores due to loan restructure, as it involves negotiating loan terms. Credit Bureau will report it as “Account Restructured under COVID-19”. However, you can always improve your credit by relaying your loan on time.
Should I hold my Credit Card payments during the moratorium extension period?
The moratorium period on Credit Cards is from a few weeks to several months. In case you opt to avail of the moratorium extension for your credit card dues, you may hold the payment during the moratorium extension period.
What precautions should be taken before availing loan structuring?
Always consider your financial condition before opting for loan restructuring. You should also carefully consider the terms and conditions offered by the lender. Understanding the implications of restructured interest rates, tenures, and overall repayment terms is crucial.
Can I restructure my education loan?
Yes, you can restructure an education loan if it is not a default account. It means you must be paying actively and there should be no delay of more than 30 days.
Also Read: Still wondering if you should consider restructuring your education loan or not? Check out the pros of doing so on our blog Benefits of Education Loan Restructure.
This was all about FAQs on Restructuring 2.0 Scheme of RBI. To sum up, loan restructuring helps you ease the financial burden by rearranging the loan repayment schedule. And loan restructuring 2.0 scheme of RBI came as a relief scheme for those affected by COVID-19. To apply for this, a list of documentation needs to be submitted to your respective banks after the completion of the application process.
If you have multiple loans, this scheme will help you recover from the effects of COVID-19 and get your career and business back on track. Always consult with your bank or financial institution and thoroughly understand the terms before opting for loan restructuring under the RBI’s scheme.
To know more about the loan application process, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.
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