New Delhi: The government plans to give debt waiver for "small distressed borrowers" under the insolvency law framework, says a senior official. The proposed waiver would be offered as part of 'Fresh Start' provisions under the Insolvency and Bankruptcy Code (IBC).
Corporate Affairs Secretary Injeti Srinivas said discussions have been held with the microfinance industry regarding criteria for the proposed waiver for small distressed borrowers from the economically weaker section (EWS). He emphasised that the waiver -- as part of individual insolvency -- would be for the most distressed within the EWS.
"If you have once availed the fresh start, then you cannot avail it again for five years. We have worked out all safeguards to the satisfaction of the microfinance industry. "It will like taking haircuts. At a national level, over a three to four years period, it will be not more than Rs 10,000 crore," Srinivas said.
As per the IBC, there are various thresholds for 'Fresh Start', including that the gross annual income of the debtor does not exceed Rs 60,000. The aggregate value of the debtor's assets should not be more than Rs 20,000 and that the aggregate value of the qualifying debts does not exceed Rs 35,000