The advent of the COVID – 19 pandemics has not only put human lives in danger; it has disrupted the whole economic structure of the country created over decades.

Since its emergence, regulators are proactively taking initiatives to alleviate the burden of corporates by introducing several types of relaxations and launching various schemes. However, these relaxations seem to be incommensurate in comparison to the overall burden of the corporates as they majorly address the regulatory aspect rather than the financial facet.

WTO, in its press release, prognosticated fall in world trade, causing immense disruption to the economy of the world, let alone India. Further, the economists of WTO believe that the decline will exceed the trade slump brought on by the global financial crisis of 2008‑09. Moreover, even the World Bank has expressed concern towards the Indian economy.

In this write-up, the author tries to provide an overview of measures taken by various Indian regulators, viz., SEBI, RBI, and CG to save our economy from falling into the swamp created by this novel virus and accelerating the economy.At present, every sector of the economy is in dire need of funds to cope with such an adventitious situation. Some of the relaxations provided by regulators are enlisted below:

Securities Exchange Board of India (SEBI)

For corporates, the capital market is one of the primary sources of raising funds. However, due to stringent SEBI regulations, the same is a bit arduous for corporates. We see the gravity of the situation SEBI has announced certain measures to facilitate fundraising from the capital market.

Relaxations / Measures

1. For issues (IPO/ Rights Issues/ FPO) opening before December 31, 2020, the issuer is allowed to increase as well as decrease the fresh issue size by up to 50% (earlier 20%) of the estimated issue size without filing fresh draft offer document with the Board subject to:

· no change in objects of the issue

· lead manager

· undertakes that the draft offer document complies with provisions of Regulation 7(1)(e)

· ensures that all the changes are made to the relevant section of DRHP and an addendum, in this regard, made public.

2. Temporary relaxations in the provisions of a right issue for issues that open on or before March 31, 2021

· Norms for making a Fast Track Rights Issues (eligibility conditions)

· The listing period has been reduced to at least 18 months from a minimum of 3 years.

· The average market capitalization of public shareholding - at least 100 crore rupees instead of 250 crore rupees.

· Complied equity listing agreement or the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations (2015, for at least 18 months instead of 3 years.

· Trading in equity shares not suspended from trading - during the last 18 months instead of 3 years

· Even if show cause notice/prosecution proceedings have been issued/initiated after necessary disclosures, issues can be made. Earlier, there was a complete bar.

· In the case of audit qualifications, issues can be made after adjustment in accounts and appropriate disclosures. Earlier, no qualifications were allowed.

· The minimum subscription requirement has been reduced from 90% to 75% of the offer through the offer document. Subject to at least 75% of the issue size shall be utilized for the objects of the issue other than general corporate purposes.

· As per erstwhile provisions, a draft letter of offer was required to be filed with SEBI for an issue size of INR 10 crores or more, now issues of less than INR 25 crores are exempted.

3. The companies which had bought their securities as per the buyback provisions were barred from raising further capital for 1 year. Given the present situation, the same has been reduced to 6 months till December 31, 2020.


The right issue is an easy way to raise funds because of fewer compliances, It is one of the most favored options for raising funds from the capital market. Even so, the eligibility conditions and other requirements were a pain for issuers. Thus, these relaxations will help issuers to raise funds with ease.

Reserve Bank of India (RBI)

RBI plays an important role in the circulation of money in the economy. Presently, RBI is conscientiously taking initiatives to increase the flow of money.

Relaxations / Measures

1. Introduction of moratorium

The moratorium means a legal authorization to debtors to postpone payment.RBI has permitted all lending institutions to grant a moratorium of 6 months (initially for three months, further extended for another three months) to all term loans and deferment of the recovery of working capital facilities. This will lead to a shift in the repayment schedule by a period of 6 months.

It is to be noted that interest shall continue to accrue on the outstanding portion of the term loans during the moratorium.

2. Easy working capital finance

Due to the economic fallout of the pandemic borrowers are facing stress, the lending institutions may revisit the sanctioned limits for working capital finance and recalculate the drawing power accordingly. However, such a change in margins is to be restored by 31st March 2021.

Anyhow, the final decision in w.r.t. (i) and (ii) above lies with the lender.

3. Asset classification

The relaxation period, as provided above, shall not be counted for determination of the number of days past-due / out of order status. Thus will not affect the classification of an asset; the question of classification downgrading is totally out of the picture.


Though RBI has permitted to grant moratorium, the flow of its benefit to borrowers is contingent upon the lenders. RBI along with the central government, is introducing various schemes to help corporates to navigate through this situation.

Central Government (CG)

Relaxations / Measures

1. Protection from insolvency laws

The threshold of default under insolvency code has been raised to INR 1 crore to help MSMEs tide over the economic fallout. It would have been inconveniently difficult for MSMEs to survive without this measure. Further, the Finance Minister declared that if required sections 7, 9, and 10 of the Code would be suspended temporarily. It was thus saving corporates from hardships caused by this virus.

2. Partial Credit Guarantee Scheme (2.0)

This scheme was initially issued in August 2019, under which the government provides first loss guarantee for the purchase of eligible asset pool of NBFCs by public sector banks (PSBs).

Certain modifications are introduced to this scheme, under which the government provides first loss guarantee of 20% on the purchase of Bonds or Commercial Papers (CPs) with a rating of AA and below (including unrated paper with original/ initial maturity of up to one year) issued by NBFCs/ MFCs/ MFIs by PSBs.The initial scheme barely qualifies as a success. As it fully depends on PSB whether to purchase or not, the success rate of 2.0 is difficult to predict even after the modifications.

3. Special Liquidity Scheme

Under this scheme, large public sector banks shall establish a special purpose vehicle (SPV) which would issue securities to RBI for an amount not exceeding INR 30,000 crore, guaranteed by the government. The SPV will utilize the proceeds to acquire the debt of at least an investment grade of short duration (having a remaining maturity of not more than three months) of eligible NBFCs / HFCs / MFIs.This scheme has been rolled out to address the liquidity crunch faced by the NBFCs, HFCs, and MFIs.


The government has introduced many schemes and taken lots of measures for MSMEs, let alone the amendment in insolvency law. Thus providing an edge to the MSME units and saving them from withering during these tough times. However, many of the schemes of the government seem only for the namesake and having no or very less effective benefit.


The pandemic has created a situation never seen or heard of. It was thus requiring measures never taken or thought of. Our government has taken charge and is making every effort to sail through these tides. However, it could be seen that the government was falling behind due to its narrow approach. At present, the government is required to take a holistic view of taking measures for all, from a corporate to the migrant worker.

In this regard, the government has introduced a package of measures for various sectors under the head of self-reliant India. But these efforts are not sufficient to overcome this grave situation. A lot more efforts are required from all to conquer this virus.


Tanvi Rastogi

Chaudhary Charan Singh University, Meerut, Uttar Pradesh

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