Debt Restructuring · Question

What happens to interest charges while a restructuring request is pending?

Short answer

In most cases interest keeps accruing at the contractual rate while the request is pending, and any overdue amount may attract additional charges under your loan agreement. Submitting a request does not by itself freeze the account. Unless the lender confirms a hold in writing, assume the clock keeps running and that the account may continue to age through the overdue stages.

In more detail

A restructuring request is a proposal, not an order. Until the lender approves new terms and the revised sanction is executed, the original agreement governs the account. That has several practical consequences.

Interest on the outstanding balance continues under the existing terms.
Overdue instalments may attract penal charges as the agreement provides.
The account's days-past-due count generally continues, so it can move from SMA-1 to SMA-2 and beyond if dues remain unpaid.
Reporting to credit bureaus follows the account's actual status, not the pending request.

If the lender approves a restructuring, the revised terms may apply from an agreed cut-off date, and some accrued interest may be funded, deferred or recast within the new schedule. That is decided case by case and cannot be assumed, so do not budget on it until the sanction says so.

Ask the lender, in writing, whether any interim position applies: whether penal charges will be held, how payments received will be appropriated, and what the account's status will be reported as. Keep copies of every reply.

Request a statement of account

Ask for a current statement showing principal, interest, penal charges and overdue days. If a figure surprises you, query it early rather than after approval.

Paying even part of what is due may slow the build-up, though it does not guarantee any change in classification. Treat the written position of the lender as the only reliable guide.

Key points

A pending request does not stop interest or penal charges unless the lender says so in writing.
Overdue accounts can keep moving through SMA stages while the request is considered.
Any relief on accrued interest depends on the approved sanction and is never automatic.
Ask in writing about charges, appropriation of payments and reporting status.

Who this applies to

Borrowers waiting for a decision who are worried about growing dues.
Finance teams reconciling the lender's statement during the wait.
Promoters who assumed that applying would freeze the account.

Last reviewed 3 October 2026

This answer is general information, not advice on your particular case. Terms, eligibility, and requirements change, so check the current position with the relevant institution or authority. Lalsar Holdings' financial advisory and financing work is advisory and facilitation only. Lalsar Holdings is not a lender. Sanction and disbursement of any credit facility is at the sole discretion of the partner bank, NBFC, or financial institution involved, subject to their own eligibility criteria and credit policy.