Economics

End of Loan Holiday Threatens Pain, Defaults for Indian Business

  • Bankruptcies, job losses and bad loans set to increase
  • Companies want more support to tide over the difficult phase
Pedestrians walk along a near-empty street near Crawford Market in Mumbai, June 2020.Photographer: Dhiraj Singh/Bloomberg
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Small businesses in India, already struggling amid the pandemic, are now having to repay mounting debt after a loan holiday ended last month.

The Reserve Bank of India gave borrowers a six-month freeze on their loan repayments, which ended on Aug. 31, with about a third of India’s $1.8 trillion outstanding loans being deferred under the program. Businesses still trying to cope with a collapse in demand must now figure out how to pay back their loans or face closure.