A loan replacing the pending balance of the previous loan, paid previously with a lower installment amount is called a restructuring loan. Loans are rearranged with the purpose of helping the borrower in times of need. The need is in terms of financial crises in order to avoid a default.
Restructuring loans are also known by the names of reconstruction loans and rescheduled loans. There are called rescheduled loans with the purpose of avoiding defaults. In such loan conditions, the borrowers can hardly afford to make payments under old terms and conditions.
Restructuring gives borrowers enough time to get back to normal life whist lets avoid the banks heavy losses. These loans are rearranged in order to meet the financial difficulties of a borrower. Restructuring a loan gives the borrower a chance to approach the bank, if unable to re-pay the loan on time.
For the borrowers, unaware of the marketing terms and conditions, Restructuring of loans might be a strenuous process.
It is the reduction in the payment amounts expanding the payment period while raising the number of payments due to the delay.