It is now clear that the coronavirus epidemic is having a direct negative impact on the economy. At the same time, its consequences will also have a serious delayed effect. For this reason, the Russian business community has essentially been forced to operate under force majeure circumstances, which demanded adjusting the existing business schemes and building its new models. In addition, these circumstances put serious pressure on the organizational structure of companies with relatively large staff.
All of the above also applies directly to Russian banks. We have prepared recommendations for you, taking into account the monitoring of recent changes and the most frequently asked questions that we have received from our clients in recent days in connection with COVID-19. We hope it will be useful and interesting for you.
Lawyer, Founder of A.T.Legal
A.T.LEGAL PROVIDES PERMANENT MONITORING OF THE NEW LEGISLATION AND AMENDMENTS, POSITIONS OF STATE AUTHORITIES, ANALYSIS AND RECOMMENDATIONS TO CLIENTS TO ENSURE QUICK DECISION-MAKING BY COMPANIES IN THE BANKING SECTOR DUE TO THE CURRENT SITUATION
A.T.Legal Recommendations to Mitigate Negative Impact for the Business
In their interactions with customers and borrowers, banks should do the following.
Given the general deterioration of the economic situation in the country during the coronavirus period, we should expect mass cases of business participants violating their obligations secured by guarantees issued by banks. For this reason, credit institutions should be prepared for more and more frequent appeals by beneficiaries to enforce guarantees issued by banks. In such cases, our experts will provide banks with effective support and legal assistance by applying their extensive and positive judicial experience, as well as using the possibilities given by the current legislation which is changing dynamically in the conditions of the crisis.
Expect an increase in the number of defaults by debtors of Banks under the cover of a temporary ban on initiating bankruptcy procedures against them. That is why our specialists are ready to carry out due diligence of dishonest debtors in every particular case, including possible bankruptcy proceedings, in order to protect bank interests both in pre-trial and in court procedure.
In their interactions with customers and borrowers, the banks should:
- be prepared to deal with appeals of debtors under loan agreements (including mortgage) with demands to establish repayment holiday for up to six months. Given the short period (only 5 days) for the consideration of such appeals it is necessary to consider a possibility to create a separate division within the bank, authorized to work with such debtors and clients.
- In connection with the possible actions of some part of depositors with the size of deposits over one million rubles to prepare for the withdrawal of funds from banks. In this connection it is recommended to conduct explanatory work with the population focusing on the fact that the income tax on interest on deposits exceeding one million rubles will be charged no earlier than the beginning of 2021 when corresponding amendments to the RF Tax Code Come into force, and will be charged from 2022. Consequently, there is currently no need for an urgent withdrawal of the deposit at this time. In addition, the income from such deposits will be subject to a tax deduction in the amount of 60 thousand rubles.
- Because of the coronavirus situation, which is steadily leading to a decrease in the income of a significant part of the population, banks should be prepared for an increase in the number of disputes with debtors-individuals associated with non-payment of interest on loans (credits) and the failure to repay loans (credits) within the prescribed period. In this connection greater attention should be paid to the litigation work.
- Systematize the client base in such a way as to identify in advance those clients (borrowers) who are potentially at risk of non-fulfillment (improper fulfillment) of obligations under loan agreements, especially those denominated in foreign currency.
- In order to minimize the risks, to identify in the list of company debtors those who will be subject to the moratorium on bankruptcy, to avoid taking obligations from them in the form of an offset, release money.
- Organizational measures necessary in the context of the spread of coronavirus infection include temporarily decrease in the number of customer service offices and temporarily remote work of employees whose personal presence in the workplace is not strictly required.
LEGAL SUPPORT BY A.T.LEGAL IN THE BANKING SECTOR IN CONNECTION WITH THE CORONAVIRUS PANDEMIC (COVID 19)
THE GLOBAL OUTBREAK OF COVID-19 HAS SERIOUS IMPLICATIONS FOR BUSINESSES AROUND THE WORLD. A.T.LEGAL CORONAVIRUS TEAM HAS BEEN ESTABLISHED TO TO PROMPTLY RESOLVE ISSUES AND CLIENT CONFLICTS RELATED TO THE PANDEMIC. WE ACCUMULATE EXPERIENCE IN DEFENDING INTERESTS OF CLIENTS IN CONNECTION WITH VARIOUS ISSUES RELATED TO THE CORONAVIRUS, AND CONSTANTLY MONITOR THE LATEST NEWS TO DEVELOP PRACTICAL BUSINESS SOLUTIONS
How can the A.T.Legal team help to your business?
A.T.Legal specialists can do the following:
- give recommendations how to conduct business in pandemic conditions, analysis of the main changes and instructions to re-arrange business processes at minimal cost
- conduct risk analysis of the issued banking guarantees in order to prevent potential attempts of unjust enrichment and other misuse taking into account the current market situation
- conduct due diligence of large borrowers taking into account specifics of their business in crisis conditions in order to assess risks of potential insolvency and, consequently, failure to fulfill their obligations to a credit institution
- monitor changes of the current legislation related to borrow support measures and the rights and duties of credit institutions related to the COVID-19 pandemic in the Russian Federation.
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