Debt financing arrangements and covid-19’s impact thereon

Altug GuzeldereManaging Partner, Guzeldere & Balkan Law Firm

Introduction:

As we continue to witness the impact of the COVID-19 outbreak on Indian as well as international trade and commerce, particularly in light of the uncertainty surrounding the ability of businesses to a) raise fresh debt in the wake of cautious institutional lending sentiment; and b) service existing debt obligations due to temporary suspension of business, we ask three important questions:

1. How does the COVID-19 outbreak impact the borrower’s ongoing debt financing arrangements?;
2. How should a borrower deal with their lenders during a period of tight credit or uncertain economic times?
3. What mitigation measures have been introduced by the Reserve Bank of India (RBI) in order to alleviate the stress in the financial sector and mitigate the burden on debt-servicing caused due to disruptions on account of COVID-19 Pandemic?