Credit Restructuring: Conditions, Types, and Examples in the Investment Sector

Credit restructuring has become one of the most popular topics among banks since 2021. The Financial Services Authority (OJK) issued a credit restructuring policy in order to ease the debt burden borne by customers who are experiencing economic difficulties.

If you work in a financial institution or insurance company, you also participate in the credit restructuring issued by the OJK. The question is, do you know what credit restructuring is and the conditions that must be met by customers who want to apply for it?

If not yet, don’t worry. Just keep reading this article until the end so that you can understand about credit restructuring.


Credit restructuring is a corrective step taken in the activity of providing credit services to debtors or customers who have the potential to experience difficulties in paying off their credit payments.

Credit restructuring can also be regarded as a form of assistance from creditors such as banking financial institutions so that debtors can repay their loans.

An important point that must be understood in credit restructuring is that this program aims to provide relief in paying off loans, not to erase the debtor’s credit as a whole.

That is, the debtor still has to fulfill his obligations with the relief that has been agreed with the creditor.

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There are three types of credit restructuring the customer can choose based on their situations:

1. Payment Term Extension

First, the debtor can apply for an extension of the tenor or payment term with a lower interest rate. This restructuring was proposed by debtors who have limited funds.

In addition, the loan interest rate is also lower than the previously agreed interest rate so that the payment burden for creditors is lighter.

2. Installment Amount Discount

This credit restructuring has the advantage of cutting the amount of installment payments accompanied by an extension of the payment term. However, the discount given is not as big as the discount on deducting the loan amount at once.

In addition, the extension of the payment term is not as long as the tenor extension program in general. Therefore, not all creditors use this type of credit restructuring.

3. Cutting the Loan Amount Simultaneously

Finally, there is credit restructuring in the form of cutting the loan amount altogether. This deduction is applied if the debtor succeeds in paying off all of his debts.

To get this restructuring, the debtor needs to have a sizeable amount of funds because the deduction is only given once and applies if all loans have been repaid.

Read also: Know Your Customer (KYC): How Does it Work and How Can it Help Your Company

Conditions for Applying

The application for credit restructuring must meet several requirements set out in accordance with financial institution policies.

In addition, credit restructuring also requires procedures that must be followed systematically. Let’s see the explanation below.

1. Terms of Credit Restructuring

Each financial institution has different requirements regarding credit restructuring. Usually, there are two restructuring conditions that must be met:

  • The customer experiences difficulties in paying the principal debt and or credit interest.
  • The customer has good business prospects so he is considered capable of paying off obligations after credit restructuring.

Financial institutions can also follow the requirements issued by OJK after the COVID-19 pandemic:

  • The debtor is an informal worker with a daily income or has a business affected by the COVID-19 pandemic and is facing difficulties in paying installments. In this case, credit restructuring or financing will only be given to debtors who meet these criteria.
  • Debtors who are not affected and still have the ability to pay are expected to continue making payments according to a predetermined schedule. Credit restructuring is focused on debtors who are experiencing payment difficulties due to the impact of the pandemic.
  • Financial institutions provide relief after conducting an assessment or assessment of the condition of the affected debtors. The assessment process aims to evaluate the debtor’s ability to meet payment obligations and determine the right type of credit restructuring to be granted.
  • This means that the credit restructuring policy can be applied by all relevant financial institutions to provide assistance to debtors who meet the requirements This means that the credit restructuring policy can be applied by all relevant financial institutions to provide assistance to debtors who meet the requirements

2. Credit Restructuring Scheme

Not only the requirements, the restructuring scheme that applies to each financial institution also varies. In general, the procedure for proposing a restructuring is usually carried out in the following steps:

  • The debtor submits a request for restructuring by completing all the data requested by the relevant financial institution. This application must include the information necessary for the assessment process.
  • The financial institution conducts an assessment to determine if the debtor is included in the category directly or indirectly affected by the current situation.
  • After the assessment is carried out, the financial institution will provide restructuring according to the debtor’s profile which includes determining the appropriate restructuring pattern or scheme, as well as the amount of debt that can be restructured. This assessment is carried out by interviewing the debtor to determine the ability to pay installments that can still be fulfilled.
  • The financial institution reviews the business conditions and ability of the debtor to pay installments every month. This review may involve up-to-date financial statements, sales records, books of accounts, and business photographs or merchandise stock.

Read also: 2 KYC Examples in Banking and Finance Industry

Examples in the Investment Sector

Credit restructuring does not only occur in financial institutions that provide credit services, but also in insurance companies.

In May 2020, one of the insurance companies in Indonesia also carried out a banking restructuring through relaxation of premium payments on life insurance guarantees.

The technical leeway is carried out by changing the data on the policy and the coverage period, by calculating the reduction of the refund premium from the new premium so that the additional premium is for the addition of the restructuring premium.

Meanwhile, additional insurance coverage is calculated on a pro-rated basis and refers to the applicable premium rate provisions based on OJK policy.

In conclusion, credit restructuring is an assistance program provided by financial institutions to ease the burden on loans owned by their customers.

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Validate Your Debtor Data with eendigo

Please note that the implementation of credit restructuring also requires a debtor verification process so that you can set restructuring policies that are appropriate to their conditions, but still maintain the economic stability of financial institutions.

Maintain the smoothness of credit restructuring process with your customers only by using eendigo User Validation! You can carry out the validation process in real-time so that you can avoid potential fraud that may occur when applying for a credit restructuring.

eendigo User Validation is also designed to avoid counterfeiting by recognizing the debtor’s real face accurately.

You can also rely on the Credit Scoring service from AdIns to assess the risk and worthiness of a customer who wants to apply for credit restructuring.

This service is based on machine learning so that it can help you study a customer’s credit risk profile comprehensively in just a short time.

Each data group is recalibrated so that you can get the right credit rating as a decision to provide credit restructuring to customers.

Contact us to get complete information about this product or try the free trial version of eendigo User Validation and the Credit Scoring service by AdIns!