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ARTICLE · 08 SEPTEMBER 2020

RBI's Surprise Gift To The Borrower

Shardul Amarchand Mangaldas & Co
Shardul Amarchand Mangaldas & Co
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Shardul Amarchand Mangaldas & Co

Shardul Amarchand Mangaldas & Co

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This year has been one of the worst nightmare any country would have anticipated.

IndiaInsolvency/Bankruptcy/Re-Structuring
Shardul Amarchand Mangaldas & Co
Shardul Amarchand Mangaldas & Co
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This year has been one of the worst nightmare any country would have anticipated. The Indian economy was already slowing in the past few years with subdued consumer demand and tepid investments, before COVID-19 pandemic struck.

To address the volatility in the economy, the Reserve Bank of India (RBI) permitted the lending institutions to allow a three months moratorium on all term loans outstanding and working capital facilities on March 27, 2020, being effective from March 1, 2020 to May 31, 2020, to mitigate the burden of borrowers brought due to disruption on account of COVID-19 pandemic and also, to ensure continuity of business. However, the said relief provided by RBI was not enough, since, the lockdown had extended and there was continuing disruptions on account of COVID-19 pandemic. Subsequently, RBI on May 22, 2020, extended this period of moratorium for another three months, being effective from June 1, 2020 to August 31, 2020.

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