Loan Restructuring 2.0 - Meaning, Eligibility & Guidelines

The concept of loan restructuring 2.0 has emerged as a significant development in the lending sector. This initiative, guided by the latest RBI circular on restructuring of loans, offers a lifeline to borrowers impacted by the economic challenges, particularly in the wake of recent global events. 

Restructuring 2.0 refers to the revised and more accommodating framework for restructuring loans, aimed at providing relief to borrowers facing financial distress. It involves modifying the terms of loans to make them more manageable for borrowers. This could include changes in repayment schedules, interest rates, or extending the loan tenure.

What is Loan Restructuring 2.0?

Loan Restructuring 2.0 represents a significant step by the Reserve Bank of India (RBI) in response to the economic challenges posed during covid-19 . This initiative, as outlined in the latest RBI circular on restructuring of loans, provides a framework for borrowers facing financial distress due to unforeseen circumstances. Restructuring is about making changes to existing loans to help those who are struggling to pay them back. It’s designed to make loan repayment more manageable for borrowers who are facing financial difficulties, by adjusting the loan terms to better suit their current situation.

Restructuring 2.0 is used to alleviate the financial burden on individuals and businesses, ensuring that they can manage their debts more effectively in these challenging times. By offering these revised terms, the RBI seeks to prevent a surge in defaults, thereby maintaining financial stability.

Are You Eligible for Loan Restructuring 2.0 Scheme? Check Here

The eligibility for the Loan Restructuring 2.0 scheme, as per the latest RBI circular on restructuring of loans, is specifically designed to encompass a broad range of borrowers affected by the economic downturn. Individuals, small businesses, and even large corporations can avail of this scheme if they have been financially impacted and are struggling to meet their loan obligations. Key eligibility criteria include a demonstrable stress due to the pandemic, a good repayment track record up to March 31, 2021, and the loan account being classified as ‘standard’ as of March 31, 2021.

Also Read: Personal Loan Eligibility

The Restructuring 2.0 program allows for a restructuring period that should not exceed 24 months. This initiative is part of the RBI’s efforts to mitigate the financial hardships caused by the pandemic, providing much-needed relief to borrowers. It’s important to understand the restructuring meaning in this context: it’s not just about deferring payments but about restructuring the loan in a way that’s sustainable for the borrower in the long term.

How to Check Whether a Loan is Eligible for Restructuring 2.0?

Under the Loan Restructuring 2.0 scheme, a wide range of loans are eligible for restructuring. As per the latest RBI circular on the restructuring of loans, this includes personal loans such as housing loans, education loans, auto loans (excluding those for commercial use), and various personal loans like Xpress Credit. Additionally, loans for business purposes to individuals, with an aggregate exposure of at most Rs.50 crores as of March 31, 2021, are also covered under this scheme.

Loans to small businesses, including those engaged in retail and wholesale trade (non-MSME), with similar exposure limits, are eligible too. It’s important to note that the accounts under these categories should be classified as ‘Standard’ as of March 31, 2021. This broad eligibility criterion under Restructuring 2.0 reflects the RBI’s commitment to supporting a wide range of borrowers during these challenging times, aligning with the broader restructuring meaning of providing financial relief and stability.

Do Commercial Banks Only Offer Loan Restructuring 2.0?

Loan Restructuring 2.0 scheme is not limited to commercial banks alone. According to the latest RBI circular on restructuring of loans, a variety of financial institutions are included in this initiative. This broadens the scope of Restructuring 2.0, allowing a wider range of borrowers to seek financial relief. Apart from commercial banks, the scheme extends to non-banking financial companies (NBFCs), small finance banks, and other financial entities regulated by the RBI.

Also Read: Why Opting For an NBFC Personal Loan is a Better Option?

This inclusive approach ensures that the restructuring meaning is realized in its fullest sense, offering support and flexibility to borrowers across different sectors of the economy. By encompassing a diverse range of lending institutions, the RBI aims to provide comprehensive relief to those impacted by the economic fallout, ensuring that the benefits of Loan Restructuring 2.0 are accessible to a broad spectrum of borrowers.

Processing Time for Your Loan Restructuring Application

When applying for Loan Restructuring 2.0, it’s important to understand the processing time involved. As per the guidelines in the latest RBI circular on restructuring of loans, the time frame for processing a restructuring application can vary. Generally, banks and financial institutions are expected to process and communicate the status of the application to the customer within 10 to 14 working days from the date of application submission.

This processing time is crucial for both lenders and borrowers to ensure that all necessary documentation and viability assessments are thoroughly conducted. It reflects the careful consideration required to align with the restructuring meaning, which is to provide a feasible and sustainable financial solution to the borrower. Applicants should therefore anticipate this period and plan their financial activities accordingly while awaiting the outcome of their Restructuring 2.0 application.

Does Loan Restructuring Scheme Impact Your Credit Score?

Opting for the Loan Restructuring 2.0 scheme can have implications for your credit score. As per the latest RBI circular on restructuring of loans, availing of this scheme will be reported to credit bureaus as a ‘Restructured’ loan. While this does not immediately imply a negative impact, it is a factor that credit bureaus may consider when calculating your credit score.

Also Read: Cibil Check Online

The restructuring meaning in the context of credit reporting is that the borrower has renegotiated the loan terms due to financial distress, which could be perceived differently by various credit agencies. However, this restructuring is a response to unprecedented economic challenges, and thus, its impact on credit scores might be viewed in the context of the current economic situation. Borrowers should weigh the immediate financial relief offered by Restructuring 2.0 against any potential long-term effects on their credit history.


Loan Restructuring 2.0 is a pivotal measure introduced in response to the economic impact of recent global events, as outlined in the latest RBI circular on restructuring of loans. It offers a lifeline to borrowers facing financial challenges, allowing them to renegotiate loan terms for more manageable repayment schedules. While it includes a broad range of loans and financial institutions, applicants should be aware of the processing time and the potential impact on their credit scores. Understanding the full restructuring meaning is crucial for borrowers considering this option, as it balances immediate financial relief with long-term credit implications.

Frequently Asked Question

What Is The Restructuring 2.0 Scheme Approved By RBI?

The Loan Restructuring 2.0 scheme, approved by the RBI, is designed to help borrowers impacted by the COVID-19 pandemic. It allows for the modification of loan terms, providing relief to those facing financial difficulties due to the pandemic.

What Type Of Loans Are Not Eligible For Restructuring?

Loans that are not eligible for restructuring under this scheme include agricultural loans, loans to financial service providers, exposures to government bodies, and loans already restructured under previous schemes.

How Do I Avail The Restructuring Benefit On My Loan?

To avail the restructuring benefit, you need to apply through your bank’s designated process, which may involve filling out an application form on the bank’s website or contacting your relationship manager.

What Are The Restructuring Options That Are Available To Me?

Available restructuring options may include an extension of the loan tenure, a moratorium on EMIs, or a change in interest rates, depending on your bank’s policy and your specific financial situation.

Do I Need To Submit Any Documents To Avail Of The Restructuring Benefit?

Yes, you will likely need to submit documents such as recent salary slips, bank statements, and other financial documents to demonstrate the impact of the pandemic on your finances.

Read More:
Documents Needed for Personal Loan

Will Opting For The Restructuring Package Have An Impact On My Credit Bureau Report?

Opting for a restructuring package will be reported to credit bureaus as ‘Restructured’, which may impact your credit score. However, this impact is generally less severe than that of a default or late payment.

I Have A Credit Card With EMI Plans Within My Credit Limit. Can I Opt For Restructuring Of Only The Card Outstanding And Not The EMI Plans?

Yes, you can opt for restructuring of the card outstanding balance. However, the specific terms will depend on your bank’s policies and the nature of your credit card debt.

Will My Credit Card Be Blocked Or Deactivated If I Avail Of The Restructuring Scheme?

Availing of the restructuring scheme may lead to your credit card being blocked or deactivated, as per your bank’s policy. This is often done to prevent further accrual of debt during the restructuring period.

Is There A Minimum Outstanding Requirement For Availing The Restructuring Facility?

Most banks set a minimum outstanding requirement for availing of the restructuring facility. This amount varies between banks and should be confirmed with your bank when applying for the scheme.

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