The RBI-Sanctioned Moratorium on Debt Servicing in India: An Analysis

Earlier this year, India’s apex financial regulator, the Reserve Bank of India (RBI) pre-empted the effect of the unprecedented spread of the Covid-19 pandemic on the Indian financial sector. The nationwide lockdown imposed by the Indian government to curtail the rise in Covid-19 infections put a strain on the viability of businesses and ability of borrowers to repay their debt. With a view to offer some respite to borrowers and mitigate their burden of debt servicing, the RBI issued a notification on 27 March 20201 (the Notification). However, the Notification was almost immediately met with criticism and what started out as a measure to ease the pressure of repaying debt immediately, ultimately threatened to bring the Indian financial system to a standstill. This article attempts to provide a brief insight into the attempted measures adopted by the RBI to avert financial stress amid the chaos of the pandemic and the resultant consequences.

Please click here to read the full article written by Anish Mashruwala and Neelasha Nemani published in Financial Regulation International.