Loan Restructuring Options: How to Ask Your Bank for Relief

If a job loss, illness or business slowdown means you cannot keep paying your current EMI, ask your lender to restructure the loan before you start missing payments. Restructuring changes the repayment terms, typically a longer tenure, a short EMI holiday or a stepped EMI, so that you can keep paying in full. It costs more interest and leaves a mark on your credit report, but it is far better than default or settlement.

What restructuring can look like

Before restructuring, ask whether a simpler change will do. On floating-rate loans RBI's 2023 rate-reset rules already let you choose a longer tenure instead of a higher EMI when rates rise, and that is not treated as restructuring.

What lenders look at before agreeing

A lender restructures only when it believes you can repay under the new terms. Expect questions on:

• Cause of stress: a temporary, documented event (hospitalisation, layoff, business disruption) is easier to accommodate than chronic over-borrowing.
• Repayment track record: years of on-time EMIs before the problem count in your favour.
• Recovery prospects: a new job offer, an expected insurance payout or an asset you plan to sell.
• Other debts: lenders check your credit report for loans elsewhere, so be upfront.
• Security: secured loans such as home loans have more room to stretch tenure, subject to the lender's age limit at maturity.

Step-by-step: how to apply for loan restructuring

1. Act before the account turns overdue

A loan becomes "special mention" once an EMI is overdue and is classified as a non-performing asset (NPA) after 90 days. Your options narrow fast as you move along that path. Contact the lender as soon as you know you will struggle; our guide on what to do if you can't pay your EMI covers the first 30 days.

2. Work out what you can actually pay

List your income, essential expenses and other EMIs. Decide the maximum EMI you can sustain and for how long. Lenders take requests with a realistic number more seriously.

3. Write to the branch and the grievance officer

Explain the cause (with proof: termination letter, hospital bills, GST returns showing a fall in turnover), when you expect recovery, and the specific relief you want. Ask for an acknowledgement.

4. Ask for the terms in writing

Get the new rate, tenure, EMI, any capitalised interest, fees and the revised repayment schedule before you sign. Check how the account will be reported to credit bureaus.

5. Check your loan insurance

Many home and personal loans come with credit-life or job-loss cover. A claim may pay some EMIs and reduce the need to restructure.

6. Keep paying what you can while the request is processed

Partial payments show good faith and reduce arrears. Do not stop completely unless the lender has agreed a moratorium in writing.

7. Stick to the new schedule

Restructured accounts are watched closely. Under RBI's prudential framework, a restructured account is typically upgraded only after a monitoring period, usually until at least 10% of the outstanding amount is repaid. A default during that period is treated seriously.

Worked example: tenure extension and moratorium

You have ₹30 lakh outstanding on a home loan at 9.25% with 15 years (180 months) left.

Option A: extend tenure to 20 years (240 months)

The EMI falls by ₹3,400 a month, but total interest rises by about ₹10.37 lakh.

Option B: six-month moratorium, then the original end date

Interest accrues at 9.25% for six months: about ₹1.41 lakh is added, taking the loan to roughly ₹31.41 lakh. Spread over the remaining 174 months, the EMI becomes about ₹32,851, nearly ₹2,000 more than before.

The lesson: a moratorium buys time, not savings. Use it only for a short, clearly temporary shock. Model both options with our EMI calculator.

Your rights and the rules that apply

• No general individual scheme in 2026: the COVID-era Resolution Frameworks of August 2020 and May 2021 have ended. Today, restructuring of individual loans is at the lender's discretion under its board-approved policy and RBI's prudential framework for resolution of stressed assets (first issued in June 2019).
• Natural calamity relief: RBI's directions on relief measures in areas affected by natural calamities let lenders reschedule loans, grant moratoriums and give fresh credit to borrowers whose accounts were standard and not more than 30 days overdue on the date of a notified calamity.
• Fair Practices Code: lenders must treat requests fairly, communicate decisions and their reasons, and give clear terms in writing.
• Penal charges, not penal interest: under RBI's August 2023 circular, late-payment penalties must be disclosed flat charges and cannot be capitalised into further interest.
• Fair recovery: RBI's rules restrict recovery calls to 8 am to 7 pm and prohibit threats or public shaming.
• Prepayment: on floating-rate loans to individuals there is no prepayment penalty, so you can pay down faster once income recovers.

Where to complain

1. Lender's grievance redressal officer: if your request is ignored, or terms you agreed are not implemented, complain in writing.
2. RBI Integrated Ombudsman: if there is no reply in 30 days or the reply is unsatisfactory, file free at cms.rbi.org.in. The Reserve Bank – Integrated Ombudsman Scheme, 2026, in force since 1 July 2026, generally requires filing within 90 days of the lender's reply or the end of its response period. The Ombudsman will not force a lender to restructure, but it can act on unfair treatment, wrong charges or failure to follow RBI rules.
3. Scam "restructuring" or "waiver" agencies: report them on sachet.rbi.org.in; for fraud or extortion, call 1930 or use cybercrime.gov.in.

What not to do

• Do not wait until the account is an NPA; lenders have far less flexibility then.
• Do not pay any agency that promises an RBI-backed restructuring or loan waiver. RBI warned again in May 2026 that such campaigns are unauthorised.
• Do not sign a restructuring without seeing the total cost and the new schedule.
• Do not take an expensive app loan to cover EMIs while the request is pending.
• Do not jump to a one-time settlement if restructuring is possible; read loan settlement vs closure first.

Key takeaways

• Restructuring changes terms so you can keep repaying in full; it is not a waiver.
• There is no blanket RBI scheme in 2026; it is case by case, except calamity relief.
• Ask early, with proof and a realistic EMI, and get every term in writing.
• Longer tenures and moratoriums raise total interest: about ₹10.4 lakh extra in the example.
• The account will be flagged as restructured, but that is far less damaging than default.
• Complain to the lender first, then the RBI Ombudsman at cms.rbi.org.in.