Can I get a loan moratorium or restructuring if I cannot pay my EMIs?

Question

I have lost my job and cannot pay my home loan EMIs for the next few months. Can I ask my bank for a moratorium or restructure the loan without being termed a defaulter? I would like to understand which provision governs this, what it entitles me to, and how long I have before the remedy lapses. I also want to know whether I need a lawyer for this or can do it myself.

MyVakeel Legal Desk · Accepted Answer

In India, the answer to "Can I get a loan moratorium or restructuring if I cannot pay my EMIs?" turns on Banking Regulation Act 1949, Section 21, RBI Resolution Framework for COVID-19 Related Stress 2021 and RBI Prudential Framework for Resolution of Stressed Assets 2019. The points below set out the position and then what to do about it, in the order it should be done.

Banks derive their power to frame lending and repayment policies, including moratoriums, from Section 21 of the Banking Regulation Act 1949, which lets the RBI issue directions on advances.

Under the RBI's Prudential Framework for Resolution of Stressed Assets 2019, a bank can restructure a genuinely stressed loan by extending tenure, reducing EMI or granting a moratorium period without immediately classifying it as a Non-Performing Asset.

Restructuring requires the borrower to submit a resolution plan request and demonstrate genuine financial stress, and the bank's board-approved policy decides eligibility and terms.

A loan restructured under an approved framework is reported differently to credit bureaus than a default, though it may still carry a flag that can affect future creditworthiness for a limited period.

If the bank refuses restructuring arbitrarily without recording reasons, the borrower can escalate the grievance through the bank's internal grievance officer and then the RBI Ombudsman under the RBI Ombudsman Scheme 2021.

What to do next: 1) Write to the bank's loan servicing branch explaining the hardship and formally request restructuring before any EMI bounces; 2) Submit income proof, termination letter or medical documents supporting the hardship claim; 3) Ask for the restructuring terms in writing, including revised tenure, interest and any additional charges; 4) If refused without reason, escalate to the RBI Ombudsman citing the bank's stressed asset resolution policy.

If you are unsure whether your facts fall inside Banking Regulation Act 1949, Section 21, that is worth checking with an advocate before you commit to a route, because switching later costs time. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in banking law.