will keepIntroduction to Loan Restructuring

The customer or a debt management advisor(on behalf of the customer) approaches the court or the bank with a request for restructuring of his existing loan arrangements, due to inability to comply with the initially agreed with bank repayment terms and conditions. The request for restructuring can be either approved or rejected and the respective decision must be implemented in the system and complied with.

As part of Loan Restructuring, it is now possible to reflect the Court Order (or bank decision) in the system and maintain it in a separate memo type of a loan arrangement, referred to as Technical Loan (TL), in parallel to the existing original loan (OL) of the customer, maintained as per the initially agreed with bank terms and conditions.

This allows correct administration accounting-wise, by keeping the TL off-balance sheet, whilst the reporting is based on the OL with preserved arrears history. This in turn ensures compliance with the current legislation for reporting of non-performing loans and exposures, forbearance and different stages of arrears when it comes to debt restructuring.

The banks can now move the OL through a number of customised restructuring stages using different controls on the loan behaviour during each stage. It is also possible to maintain the direction, allocation and mapping of the payments onto/between the OL and the TL arrangements in compliance with the banks’ internal processes as well as accounting principles.

Based on the customer’s behavior the banks are also able to close the TL(s) and revert to the OL arrangement at any point of time when such decision is taken by the bank.