Impact of India’s new personal insolvency and bankruptcy regime

This is Part 3 of a 3-part series on the recently released NCAER-MFIN report, "Assessing the Effectiveness of Regulated Small Borrowing in India". In this blog, we examine issues related to measurement and empirical strategy.

This is Part 2 of a 3-part series on the recently released NCAER-MFIN report, "Assessing the Effectiveness of Regulated Small Borrowing in India". In this blog, we turn to some of the broader claims advanced in the report regarding the wider benefits of microfinance and assess whether these claims hold up when situated in a broader empirical context.

This is Part 1 of a 3-part series on the recently released NCAER-MFIN report, "Assessing the Effectiveness of Regulated Small Borrowing in India" (March 2026).

Liquidity support by the Centre may offer symptomatic relief, but India’s microfinance sector needs a structural recast. Without reforms to address recurring cycles of over-lending and loan stress, another credit guarantee package will only postpone the next crisis in this fragile sector.

In the paper, we lay out a theoretical frame for thinking about microfinance crises. The theoretical frame draws from Hyman Minsky’s 1977 work on financial instability, and layers over it a cultural reasoning that recognises overlending and overborrowing as cultural traits that sometimes takes hold of microfinance markets.

This paper focuses on Part III of the IBC, which deals with natural persons, proprietorships, and personal guarantors for corporate debt.