Corona Virus (COVID-19) Update: Companies cite 'Act of God' clause; seek relief in loan repayments

Hit by the novel coronavirus, or COVID-19, outbreak, real estate, tourism, and hospitality companies have sought relief in loan repayments, citing the 'Act of God' clause, The Economic Times reported.

"Act of God" is a legal term used to describe events outside of human control and activity and is invoked if a business is impacted by circumstances such as natural calamity, epidemic or war.

Travel restrictions over the past month have hurt the tourism and hospitality industries hard. The situation worsened after India suspended both international and domestic flights.

Prime Minister Narendra Modi announced a 21-day lockdown starting from March 25. This will force employees across all sectors to stay at home, except those in essential services.

"We have started receiving requests from several companies citing the "Act of God" clause to restructure loans and provide leeway in repayments. In some cases, these loans are upwards of Rs 200 crore," the article quotes a banker as saying.