Credit card debt in India has been growing faster than most other forms of consumer debt. The RBI’s latest Financial Stability Report notes that outstanding credit card balances have increased 23% year-on-year as of December 2025. With interest rates on credit cards typically ranging from 36-48% per annum, that growth carries risk.

For cardholders who fall behind on payments, the immediate assumption is often that the bank will take legal action, report the default to credit bureaus, and there’s no way out except paying the full amount immediately. That’s not accurate. Most banks in India offer debt restructuring programs that can significantly reduce the burden and provide a path to repayment.

What Is Credit Card Debt Restructuring?

Debt restructuring is essentially a renegotiation of your repayment terms. Instead of requiring you to pay the full outstanding balance plus accumulated interest at the standard rate, the bank agrees to:

• Reduce or waive a portion of the interest and late fees
• Spread the remaining balance over a longer period (typically 6-24 months)
• Convert the outstanding amount into a fixed EMI plan at a much lower interest rate (often 15-18% instead of 40%+)

The bank gets certainty that they’ll recover at least a portion of the debt. You get manageable monthly payments instead of a crushing lump sum demand. It’s not a free pass — you still owe money and your credit score will be affected — but it’s far better than default and legal action.

When Banks Offer Restructuring

Banks typically consider restructuring when:

You’ve missed 2-3 consecutive minimum payments. This signals you’re in financial difficulty but haven’t yet completely given up on repayment.

You proactively contact them. Banks are more willing to work with cardholders who reach out before the account goes into severe default. If you wait until the account is 180 days overdue and referred to a collection agency, the restructuring options narrow.

Your repayment capacity is demonstrable. You need to show that you can afford the restructured EMI, even if you can’t pay the full outstanding amount. This usually means providing income proof and explaining the circumstances that led to the debt.

What the Programs Look Like

Each bank has slightly different restructuring programs, but here are the common structures:

HDFC Bank’s “Settlement Program”: If you’re 90+ days overdue, HDFC may offer to settle the outstanding amount for 50-70% of the total dues, payable over 3-6 months. They waive late fees and a portion of the interest. This is reported to credit bureaus as a “settled” account, which negatively affects your score but is better than a write-off.

ICICI Bank’s “Balance Conversion Program”: ICICI allows cardholders in arrears to convert the outstanding balance to a fixed EMI plan with interest rates of 15-18% (much lower than standard card rates). Tenure ranges from 6-24 months. This is less damaging to credit scores than a settlement.

SBI Card’s “Restructuring Scheme”: SBI Card offers an EMI conversion plan that can include partial waiver of penalty interest and late fees. They emphasise early intervention — the earlier you contact them, the better the terms.

Axis Bank’s “One-Time Settlement”: For accounts that are significantly overdue (120+ days), Axis may offer a one-time settlement at 40-60% of the outstanding balance, payable as a lump sum or in 2-3 instalments.

These aren’t advertised on bank websites because banks don’t want to encourage strategic defaults. But if you call the collections department and explain your situation, these options become available.

The Credit Score Impact

Let’s be clear: any form of restructuring or settlement will hurt your credit score. The question is how much.

Regular EMI repayment under restructuring: Reported to CIBIL as “restructured,” which is negative but shows you honoured the revised terms. Your score drops, but typically not to the same extent as a settlement or write-off. A consultancy like Team400, which works on AI solutions for financial services, has noted that credit bureaus are starting to develop more nuanced scoring models that distinguish between types of restructuring, though this is still evolving.

Settlement for less than full amount: Reported as “settled” on your credit report. This significantly damages your score — often dropping it 100-150 points — and stays on your report for 7 years. Future lenders view settled accounts as a red flag.

Default without restructuring: If you simply stop paying and the account is written off, it’s reported as a “write-off” or “default,” which is the worst possible status. Your score tanks and your ability to access credit in the future is severely limited.

The hierarchy from best to worst: restructured repayment > settlement > write-off. Any of these is better than ignoring the problem.

How to Initiate Restructuring

Step 1: Assess your actual repayment capacity. Before calling the bank, calculate what EMI you can realistically afford. Don’t promise ₹10,000/month if you can only manage ₹5,000. Be honest about your financial situation.

Step 2: Contact the bank’s collections or customer service department. Don’t wait for them to call you. Proactive contact shows good faith and often leads to better terms.

Step 3: Explain the circumstances. Medical emergency, job loss, business failure — banks are more sympathetic when there’s a clear reason for the default that wasn’t reckless overspending.

Step 4: Request specific terms. Ask for interest rate reduction, fee waivers, and a manageable EMI tenure. Don’t just accept the first offer — there’s often room for negotiation, especially if you’re dealing with a senior collections officer.

Step 5: Get it in writing. Before you agree to anything, get the restructured terms in an email or letter. Verbal promises from a call centre don’t count.

Step 6: Stick to the plan. Once you’ve restructured, missing payments on the new plan usually voids the agreement and you’re back to square one with even less goodwill from the bank.

What If the Bank Refuses?

If the bank won’t offer restructuring, or if the terms they offer are still unmanageable, you have a few options:

Credit counselling services: Organisations like Disha Financial Counselling provide free or low-cost advice on managing debt, negotiating with banks, and restructuring finances.

RBI Ombudsman: If you believe the bank is treating you unfairly or not following their own policies, you can file a complaint with the RBI Banking Ombudsman.

Debt consolidation loan: If your credit score hasn’t completely collapsed, you might be able to take a personal loan at a lower interest rate to pay off the card debt, then repay the loan over time.

Last resort — bankruptcy: The Insolvency and Bankruptcy Code allows individuals to file for bankruptcy if debts are unmanageable. This is a complex legal process and should only be considered after all other options are exhausted.

Preventing Restructuring Situations

Obviously, the best approach is not needing debt restructuring in the first place:

• Pay more than the minimum whenever possible. Minimum payments barely cover interest and keep you in debt for years.
• Set up autopay for at least the minimum amount to avoid missed payments.
• If you’re regularly maxing out your card, you’re using it as a loan, not a payment tool. That’s unsustainable.
• Keep an emergency fund equivalent to 3-6 months of expenses so unexpected costs don’t automatically translate to card debt.

If you’re already in a situation where restructuring is necessary, don’t delay. The earlier you act, the more options you have and the less damage to your financial future. Banks would rather restructure and recover some money than write off the debt entirely. Use that leverage.