Debt Restructuring for Businesses at ₹25 Crore and Above
Running a going concern with ₹25 crore or more of debt across several lenders creates pressure long before any account slips. Credit Core Finance appraises the full debt stack, designs the refinance or consolidation, and places it with lenders while every facility is still standard. This page sits under our structured funding /structured-funding/ desk, which handles tickets from ₹25 crore upward.
WHAT DOES "DEBT RESTRUCTURING" MEAN FOR A BORROWER AT ₹25 CRORE AND ABOVE?
Under Reserve Bank of India rules, restructuring is something only a lender does. A lender restructures an account when it grants concessions for economic or legal reasons relating to the borrower's financial difficulty. The concessions include a change in the repayment period, the instalment schedule or the interest rate; a roll-over; an additional facility sanctioned to cure a default; an enhancement of limits; or a compromise settlement where payment runs beyond three months. That is the definition in the RBI (Commercial Banks – Resolution of Stressed Assets) Directions 2025, dated 28-Nov-2025.
Refinancing from within the Indian banking system, when the borrower is in financial difficulty, is treated as restructuring under the same Direction and under the RBI (Commercial Banks – Transfer and Distribution of Credit Risk) Directions 2025, dated 28-Nov-2025. It makes no difference which institution takes over the exposure.
Credit Core Finance does not restructure loans. We appraise the group balance sheet, structure the consolidation or refinance, and place the file with lenders on our panel while the accounts are still performing.
IS THIS THE PAGE YOU NEED?
If you are moving a single facility of ₹1 crore or more to a better lender, read loan takeover and balance transfer instead.
If an account has already been tagged SMA or has come back from NPA, the right page is funding after SMA or regularised NPA.
Once insolvency has been admitted, the work moves to NCLT resolution funding.
WHAT CAN BE DONE WITH A LARGE DEBT STACK?
Consolidation brings working-capital lines, machinery loans and term facilities spread across several lenders into one or two primary arrangements. Fragmented security charges go, and day-to-day banking gets simpler. Tenor re-sequencing lines up principal repayment with the cash the business actually generates. Term debt squeezed into short windows drains liquidity; spreading it over longer maturities eases the pressure without asking any lender for a write-off. Taking out the costliest lender cleans up the stack. An NBFC line carrying a higher rate can be paid off through term debt placed with a nationalized, private or MNC bank.
A settlement-led exit deals with one unviable facility on its own. The borrower negotiates a one-time settlement on that facility, funded by fresh promoter money or the sale of an unencumbered asset, while the operating facilities are refinanced under a performing structure. A worked example of a two-bank exit and settlement clean-up is on our case study page.
An escrow ring-fences operating cash for debt service. No RBI rule requires an escrow or trust-and-retention account merely because a borrower has several lenders or project debt; it is a negotiated structure. Where the fix is the working-capital line rather than the term debt, see working capital syndication.
Illustrative: a manufacturer carries ₹32 crore across four lenders: a ₹14 crore cash-credit limit with Lender A, an ₹8 crore machinery term loan with Lender B, a ₹6 crore working-capital demand loan with Lender C and a ₹4 crore unsecured line with an NBFC. We model the cash flows and debt-service capacity, then place a structure that pays out the secondary lines into a single facility.
WHAT CHANGES ON THE DAY A LENDER RESTRUCTURES?
A standard account restructured under the framework is downgraded to NPA at once. It returns to standard only after satisfactory performance, meaning no default, through the monitoring period. At ₹100 crore or more of aggregate exposure, an investment-grade rating of BBB- or better from one rating agency is needed at the time of upgrade; at ₹500 crore or more, from two. These are the terms of the Resolution Directions 2025.
The 30-day review period and the 180-day resolution-plan clock, with additional provisioning of 20% and then 35%, are mandatory only for aggregate exposure of ₹1,500 crore and above (₹2,000 crore and above from 07-Jun-2019; ₹1,500 crore to ₹2,000 crore from 01-Jan-2020). Below ₹1,500 crore that clock has not been switched on. The downgrade described above still applies.
Reporting does not wait for a downgrade. Lenders report every borrower with ₹5 crore or more of aggregate exposure to the Central Repository of Information on Large Credits every month, and any default by such a borrower every week, by close of business on Friday, under the Resolution Directions 2025.
Lenders also talk to each other. With sanctioned limits of ₹5 crore or more, or known multiple banking, the borrower declares all facilities and lenders exchange conduct information at least quarterly under the Transfer and Distribution of Credit Risk Directions 2025.
Consortium lending is not compulsory at any exposure level. The credit bureaus see it within days. Lenders report as on the 9th, 16th, 23rd and last day of each month; the month-end full file reaches the bureaus by the 5th of the next month and interim changes within four calendar days, under the RBI (Commercial Banks – Credit Information Reporting) Amendment Directions 2025, in force from 01-Jul-2026.
WHY TIMING DECIDES THE OUTCOME
Overdue positions are bucketed by the day. An account is SMA-0 when overdue up to 30 days, SMA-1 from 31 to 60, SMA-2 from 61 to 90, and NPA once overdue beyond 90 days. Classification runs at day-end. A cash-credit or overdraft account is "out of order" on its own test. An NPA moves back to standard only when every overdue across all facilities with that lender is cleared, under the Resolution of Stressed Assets Directions 2025 and the RBI (Commercial Banks – Income Recognition, Asset Classification and Provisioning) Directions 2025, both dated 28-Nov-2025. A refinance done while every account is standard and clean keeps its footing. The incoming bank obtains the credit information before the takeover and the outgoing bank supplies it at the earliest, under the Transfer and Distribution of Credit Risk Directions 2025. There is no 12-month waiting period and no minimum vintage for a takeover. A refinance granted after difficulty has set in is restructuring, with the consequences set out above.
Pricing follows the contract. Floating-rate loans to micro and small enterprises are linked to an external benchmark (from 01-Oct-2019); larger corporates are priced by contract, off MCLR or an external benchmark; benchmark-linked rates reset at least once in three months, under the RBI (Commercial Banks – Interest Rates on Advances) Directions 2025, dated 28-Nov-2025.
SETTLEMENT AS PART OF THE PLAN
A one-time settlement runs under the lender's board-approved policy. A minimum cooling period of 12 months applies before any fresh exposure to that borrower, and the board may set a longer one, under the Framework for Compromise Settlements and Technical Write-offs, dated 08-Jun-2023. Two classifications shut the door on fresh credit. Wilful-default reporting starts at ₹25 lakh and "large defaulter" at ₹1 crore under the RBI (Commercial Banks – Treatment of Wilful Defaulters and Large Defaulters) Directions 2025, dated 28-Nov-2025; while listed, and for one year after removal, no lender may grant additional credit, and a new venture is barred for five years after removal. A borrower classified as fraud is barred from RBI-regulated finance for five years from full repayment of the amount, or of the settlement agreed, under the Master Directions on Fraud Risk Management, dated 15-Jul-2024.
On secured debt that has turned NPA, SARFAESI action begins with a 60-day demand notice under section 13(2), and no enforcement is possible unless the security interest is registered with CERSAI under section 26D.
IF A PROJECT LOAN IS IN THE STACK
Deferring the commercial-operations date of a project loan is a resolution plan under the Resolution Directions 2025. The account stays standard if the deferment is within three years for an infrastructure project or two years for a non-infrastructure project, subject to the conditions in the Direction.
WHAT THE FILE NEEDS
We read the whole stack before it goes anywhere near a credit committee. Keep these ready :
- Audited financial statements for the last three years and the provisional balance sheet for the current year
- Sanction letters for every bank and NBFC facility
- Repayment track and statement of account for each facility
- Foreclosure statements and closing letters from the lenders being paid out
- ROC charge index and the full list of security offered
- Current stock statements and aged receivables
- Monthly cash-flow projection for the next 12 months
- Group structure with shareholding and sister-concern financials
COST LINES TO CHECK BEFORE SIGNING
Prepayment charges depend on who the borrower is. Floating-rate business loans to individuals and micro or small enterprises carry no prepayment or foreclosure charge for loans sanctioned or renewed from 01-Jan-2026, under the RBI (Pre-payment Charges on Loans) Directions 2025, dated 02-Jul-2025. For medium and large borrowers the charge follows the lender's board-approved policy and must be printed in the sanction letter and, where applicable, the key facts statement. Charges are filed with the Registrar of Companies. A change in the terms or extent of a registered charge is a modification under section 79 of the Companies Act 2013 and is filed like a fresh charge: within 30 days, outer limit 120 days, under section 77. Satisfaction is filed within 30 days under section 82.
Stamp duty applies to the security documents. In Maharashtra, a mortgage by deposit of title deeds carries 0.1% up to ₹5 lakh with a minimum of ₹100, and 0.3% above ₹5 lakh, capped at ₹20 lakh, under Articles 6 and 40 of the Maharashtra Stamp Act. The collateral instrument carries ₹500 when the principal document is stamped. A mortgage with possession draws conveyance duty. GST falls differently on each fee. Penal charges levied in line with RBI instructions attract no GST; processing, documentation and other fees charged over and above interest do, under CBIC Circular 245/02/2025-GST, dated 28-Jan-2025. Capital cost shapes lender appetite on the largest stacks. An unrated borrower with more than ₹200 crore of aggregate bank exposure carries a 150% risk weight for the lender under the RBI (Commercial Banks – Prudential Norms on Capital Adequacy) Directions 2025, dated 28-Nov-2025. On stacks approaching that size, an external rating is part of the file from the start.
WHY CREDIT CORE FINANCE
Credit Core Finance sits in the seat between your tax consultant and the bank's credit manager. We read your financials, security and covenants the way the credit committee will read them, before the file leaves our desk. We work across a panel of more than 90 lenders: nationalized banks, private and MNC banks, and NBFCs. Our desk designs the structure, prepares the appraisal note and deals directly with the credit managers who will sanction it.
Frequently Asked Questions
Does refinancing my loans count as restructuring?
Yes, if the refinance is granted to a borrower in financial difficulty. Under the RBI Resolution of Stressed Assets Directions 2025 and the Transfer and Distribution of Credit Risk Directions 2025, a refinance from within the Indian banking system for a borrower in financial difficulty is restructuring, whichever lender grants it.
Will my account become NPA if a lender restructures it?
Yes. When a lender grants concessions and restructures a standard facility, the account is downgraded to NPA at once under the Resolution Directions 2025. It returns to standard only after satisfactory performance, meaning no default, through the monitoring period. Borrowers with ₹100 crore or more of aggregate exposure also need a BBB- or better rating from a rating agency at the time of upgrade.
Can I consolidate loans from four banks into one?
It can be done, subject to appraisal. Lenders exchange conduct information under the Transfer and Distribution of Credit Risk Directions 2025, and the incoming bank obtains the credit information before it sanctions a takeover. The file has to stand on its own with every facility still standard.
What is the cooling period after a one-time settlement?
A minimum of 12 months before any fresh exposure to that borrower, under the RBI Framework for Compromise Settlements and Technical Write-offs, dated 08-Jun-2023. Each lender's board may set a longer period.
Is there a prepayment charge on a large business loan?
For medium and large enterprises the charge follows each lender's board-approved policy under the RBI (Pre-payment Charges on Loans) Directions 2025 and must be printed in the sanction letter. Floating-rate business loans to micro and small enterprises or individuals carry no prepayment charge for loans sanctioned or renewed from 01-Jan-2026.
When does this become an NCLT matter?
Insolvency proceedings under the Insolvency and Bankruptcy Code 2016 can be started once a default reaches ₹1 crore, the minimum since 24-Mar-2020. Once insolvency has been admitted, the work moves to NCLT resolution funding.
Do you name the bank before the file is appraised?
No. We read the group financials, the facility structure and the cash flows first. Once the structure is modelled, the proposal goes to the lenders on our 90+ panel that fit it. Bank names are not published on this site.
Reviewed: 09-Sep-2026 • Bishal Mishra, Director