A new scheme on debt relief over cards for small borrowers

Scheme structured under IBC, micro-enterprises, small farmers, artisans, cottage industries to benefit.

For micro-enterprises, small farmers and artisans, universal debt relief funds have begun in India, which will implement when the next government is in place.
People below a specified income and asset threshold will be benefited with this debt relief. Individual with the annual income equal to 60000 or below, outstanding loans of Rs 35000 or below, and assets worth Rs 20,000 or below may be eligible.
This loan waiver program will be well structured across sectors for microenterprise, artisans, small farmers or other individuals,” corporate affairs secretary Injeti Srinivas told ET. “It will be a universal debt relief scheme for poor.” The scheme, which is being worked on by the Ministry of Corporate Affairs (MCA), will be one of the critical features of changes being considered to the Insolvency and Bankruptcy Code (IBC). The schemes most probably will not exceed amount RS 20,000 crore, but the very small-ticket loan category will get a benefit, said Srinivas. 
Although Srinivas pointed out that any special dispensation will not be provided for small borrowers and some amendments are being required by personal insolvency chapter as well.
“Some people are genuinely poor and the law as it stands today provides the process (for them) is as rigorous as corporate insolvency resolution process,” he said. “In this category now you will have millions and millions of people coming in… No system will be able to deliver.” The corporate affairs ministry is confident of finalizing the scheme in a quarter, keeping it ready for the next government to roll out, he said.  A dedicated team with an online system within the Insolvency and Bankruptcy Board of India (IBBI) examine and take a call on applications. “A personal insolvency cell or division in IBBI will be created to handle debt relief funds only,” said Srinivas.


Flexibility to Opt Out 

“An individual get entitled to get debt relief and will be able to make a fresh start if that individual can establish that his income and assets are less than the specified threshold.”
For better flexibility, this scheme will be provided to individuals who opt out to protect credit history. “A person who doesn’t avail the scheme we will exempt them because debt relief will put some stigma on you or restraint on taking future credit,” Srinivas said, that underlining individuals will have the option to opt for insolvency.