Similarities and Differnces between restructuring and rescheduling of loan

Points of Similarities of Rescheduled and Restructured Loans

Points of Distinction between Rescheduled and Restructured Loans

Nature: Rescheduling is extension of tenure of facility for payment of Sale Price but Restructuring is redemption of existing facility.
Arrears/Charges: Rescheduled Amount shall not contain additional charges above the old Sale Price whereas Restructured amount may incorporate arrears, capitalization of penalty, profit charges, i.e. resulting in the amount exceeding the Old Sale Price.
Contract Applied: In rescheduling, contract is applied as supplementary agreement. On other hand restructuring requires new set of documents.
Effect on Existing Contract: 1st security documents not terminated and obligation is continuing, security is not discharged in rescheduling but in restructuring 1st security documents terminated and security discharged.
Application: In rescheduling customer wish to extend tenure of facility at lower monthly installment rate and in restructuring Customer wish to start on a clean slate by terminating 1st security agreements and entering into new security agreements.