Reschedulement of the Loan

Reschedulement of the Loan:

Reschedulement of the loan is done in case of genuine difficulties faced by the borrower. The decision regarding reschedulement is taken by discussion among executives. While rescheduling the loan two things are considered: the borrower, his relationship with the bank, his credit standing, his reputation in the market, etc. Whether the project can actually be reviewed is decided according to the industry conditions, the conditions of the project, problems faced by the project, etc. The bank calls it as rehabilitation of loan. If the borrower is making default in repayment because of any genuine reason and the bank feels that the project is recoverable then reschedulement is done. In case of major default, interest charged is transferred to other account of the borrower so that no further (compound) interest is charged on it.