Loan restructuring is one of the most ideal ways to overcome the financial crisis and distress. It helps a lot in managing a financial crunch that too without impacting the credit score. In case of economic crises and financial emergencies like the COVID-19 pandemic, the loan restructuring relief came as a much-needed relief to the borrowers. In this blog, we will identify the benefits of education loan restructuring in detail.
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Understanding Education Loan Restructuring
The loan restructuring is a ruling introduced by the Reserve Bank of India to help individuals facing difficulties in the repayment of the loan. In the loan restructuring process, the loan terms are modified according to the mutual discussion and agreement between the borrower and the lender. It can lighten the burden of the borrowers if they are willing to repay the loan but aren’t able to do so because of their financial crunch and unavoidable situation.
Also Read: Facing financial distress due to high-interest rates? Check all the information about Education Loan Refinancing and get a balance transfer for the loan.
Benefits of Education Loan Restructuring
As per the guidelines of the Reserve Bank of India, education loan restructuring aims to provide much-needed relief to borrowers facing financial crisis. Check out the benefits of education loan restructuring below.
- A loan moratorium can be provided for up to two years after the restructuring of an education loan.
- The loan tenure can be extended to reduce the EMI payable as per the repayment capacity.
- The loan restructuring is really helpful in reducing the overall debt burden on the borrower.
- The outstanding amount can be transferred into a separate credit facility.
- The loan restructuring resolution plan can be implemented within 90 days.
- It provides the flexibility to repay the loan as per the financial condition.
- The extended repayment period leads to a reduction in the amount of EMIs to be paid monthly.
- Some restructured loan programs also provide the benefit of reducing the overall amount of the loan by reducing the EMIs of the education loan.
- With on-time payments and proper financial management, the credit score can be improved effectively.
- No doubt, loan restructuring impacts credit scores, but this impact is temporary and later on improves the CIBIL with timely payments.
Who Can Avail the Benefit of Loan Restructuring?
In the case of education loan default, it is important to note that the loan restructure status on the credit report remains for a specified period. However, you can improve your credit score and the loan restructure status can be removed easily from your credit report. According to the guidelines by the Reserve Bank of India, loan restructuring can be availed only once throughout the tenure of the loan. The aim is to change the repayment terms for the MSME or corporate borrowers impacted by the COVID-19 financial crisis and facing financial crunches. For individual borrowers, the loan restructuring can be done for any personal loan availed. The resolution plan of loan restructuring was approved by the RBI, only if the loan was not outstanding for more than 30 days. In the case of MSME borrowers, the outstanding period is 89 days.
Also Read: Check Out All The Details About Loan Restructuring In One Of Our Specialised Blogs Education Loan Restructure!
FAQs
You may be levied a fee if you apply to get your loan restructured.
Yes, you can remove the loan structure status from your CIBIL report in very little time with regular payments and monitoring.
With the help of RBI rulings, borrowers have the option to hold their EMI payments for a few months. The repayment period can also be increased to reduce the amount of EMI.
Indeed, the loan restructuring impacts the credit score. It indicates the crisis in doing payments which may result in barring lenders in the future.
Yes. You can apply for education loan restructuring from the bank if you have not defaulted on your payments and there is no delay of more than 30 days.
The loan structuring indicates the crisis in doing payments which may result in barring lenders in the future.
Hope you liked our blog about the benefits of education loan restructuring. 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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