How loan restructuring scheme can impact your finances: Things to know

The accumulated interest will increase the principal and you will have to pay a higher interest rate on it

Two banks — State Bank of India and HDFC Bank — have so far published their frameworks for restructuring loans. One key difference that borrowers need to bear in mind is that while in the first phase of the moratorium (March-August), the interest rate remained the same, this time the moratorium could come with a cost attached.

Key preconditions: To avail of the moratorium, borrowers will have to demonstrate that their income has been impacted by the pandemic. Salaried employees will need to furnish their salary slips or account statements. Self-employed borrowers will need to furnish a declaration.

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