India's freeze on fresh bankruptcy proceedings due to the coronavirus pandemic is expected to hurt the country's already fragile banking system and delay bad debt resolutions. The government amended the Insolvency and Bankruptcy Code 2016 so that no new bankruptcy cases can be filed for defaults arising on or after March 25, when the lockdown was declared, with the suspension to last for six to 12 months. While the suspension of fresh bankruptcy cases will help businesses facing a near-term liquidity crunch, "banks and financial institutions are worried that the credit discipline which was enforced by the bankruptcy code may go for a toss", said Aviral Jain, co-head and managing director of global restructuring advisory at Duff & Phelps. India introduced a new insolvency and bankruptcy framework in 2016 to try to speed up debt workouts and has tweaked it over the years.
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