Loan restructuring
- August 8, 2020
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Subject: Economy
Context:
In its monetary policy review, the Reserve Bank of India gave the green signal to a loan restructuring scheme for stressed borrowers
Concept:
- Restructuring is a practice that allows banks to modify the terms of the loan when the borrower is facing financial stress.
- Banks do that to avoid the borrower being declared a defaulter and the loan having to be classified as a non-performing asset.
- It could be through a change in the repayment period / repayable amount / number of installments / rate of interest/ additional loans.