3 min read.Updated: 05 Oct 2020, 07:03 AM ISTGaurav Chopra
While loan restructuring is a useful and timely financial scheme, it risks putting borrowers into a debt trap, which must be avoided at all costs
With the Reserve Bank of India’s (RBI) six-month moratorium on equated monthly instalments (EMIs) ended on 31 August, individuals who have had to endure the covid-19-induced pay cuts, job losses and rising debts are not sure how to repay their existing loans. The moratorium, while temporarily easing the liquidity crisis for individuals, has also left many borrowers with a bigger loan burden. They will now have to repay the accumulated EMIs with interest. Keeping this in view, RBI has allowed banks to restructure loans for borrowers who still find it difficult to service their EMIs due to the continued economic fallout of covid-19 and its impact on their finances.