Assessing the Borrower-Level Impact of the Insolvency and Bankruptcy Code: A Study of the Fresh Start Process
The 2016 Insolvency and Bankruptcy Code (IBC) is a landmark legislation with the potential to impact every borrower. This paper focuses on Part III of the IBC, which deals with natural persons, proprietorships, and personal guarantors for corporate debt. Through the paper, we attempt to estimate the potential consequences of the Fresh Start Process (FSP) defined under this Part. The IBC lays out economic criteria that can qualify (or disqualify) an applicant for FSP. Under FSP, a borrower must be asset-lite, have a low income, and hold minimal outstanding debt to qualify. These thresholds determine the applicability of the process once the IBC is fully notified. Thus, empirical estimates regarding the effects of the provisions on the Indian credit market are crucial to deciphering the impact of the IBC, more specifically, the FSP.
Let’s not conflate microfinance with self-help-group financing
The microfinance industry has witnessed moves by the Reserve Bank of India (RBI) to revise the regulatory framework (March 2022) for it and also caution it against an exclusive focus on business growth (November 2022).
Does moratorium affect loan repayment behaviour?
Governments and lenders provide loan moratoria to help struggling borrowers, particularly during an economic crisis. While it can provide relief to borrowers, such a policy also has a possibility of inducing moral hazard among the beneficiaries.
Debt Distress Protocols
An action project to help financial service providers detect debt distress among their borrowers and administer interventions to alleviate distress. Read the full report here.
Identification & Alleviation of Over-indebtedness: Introducing the Debt Distress Protocols Project
An action project to help financial service providers detect debt
distress among their borrowers and administer interventions to
alleviate distress.
Must Shylock Receive His Pound Of Flesh? An Ethical Inquiry Into The Insolvency And Bankruptcy Regimes For Natural Persons
T he Insolvency and Bankruptcy Code, 2016 (Code) is the umbrella legislation for
insolvency resolution of corporate persons, partnership firms and individuals
NSSO’s latest Debt and Investment survey points to significant disparities in net worth among Indian households
In this post, we find that the distribution of net worth is skewed as there is a higher concentration of households with lower levels of net worth. It is also seen that households better integrated in the formal financial system enjoy a higher net worth compared to households that are not.
Insights from the All-India Debt and Investment Survey 2019
The All-India Debt and Investment Survey (AIDIS) conducted by the National Statistical Office is a nationally representative survey of Indian households that collects information about the assets and liabilities of households.
Even Before Pandemic, Debts Had Soared By 84% In Rural & 42% In Urban India
The pandemic-led economic crisis has exacerbated the rising indebtedness among India’s poor households, and could push more families into a debt trap
Addressing Borrower Distress- A Principle-based Approach
In this post, to help enhance the efficacy of relevant frameworks, we lay out the key principles that the two primary actors, the banking sector regulator and the regulated lenders, must be guided by while designing policies to tackle debt distress caused by severe economic shocks.