Foreign experience of legal regulation of contractual relations in bank lending to SMEs (the case of India): classification of covenants by the degree of state participation

Abstract

The article, based on a comparative legal analysis, examines the contractual structures of bank lending to small and medium-sized enterprises (SMEs) applied in the Indian legal system. The choice of this jurisdiction is justified by its strategic partnership with Russia, membership in BRICS, a similar understanding of the role of SMEs in the national economy, and its belonging to the Anglo-Saxon legal family, which makes its experience particularly valuable for improving Russian civil and banking legislation. Special attention is paid to the institution of covenants in loan agreements: its legal nature, functions and diversity of classifications. The author proposes and details a classification of covenants according to the criterion of the degree of state participation in lending, including five categories — from fully market loans to loans under special regulatory conditions. For each category, typical types of covenants, their purpose and application features are given. The conclusion is made about the potential of implementing certain Indian constructions into Russian practice, as well as the need for systematization and legalization of covenant conditions in domestic civil legislation.