Can't payback loan? Expect waiver up to Rs 60,000 after elections, like farmers!

If all goes well, individuals, who can't repay loan up to Rs 60,000, may soon qualify for a debt waiver, like farmers! According to a report by DNA, the Insolvency Law Committee (ILC) of the government is expected to propose a new debt relief scheme under the personal bankruptcy law framework for people in the low-income category. The report says that the recommendation in this regard may be presented to the government after the Lok Sabha elections 2019 are over. 

Currently, only corporate debtors face bankruptcy proceedings. However, part 3 of Insolvency and Bankruptcy Code (IBC) deals with insolvency resolution and bankruptcy for individuals and partnership firms. This is yet to be activated. 

Part 3 of IBC applies to matters relating to "fresh start, insolvency and bankruptcy of individuals and partnership firms where the amount of the default is not less than Rs 1000," according to the IBC code 2016.  As per rules, the Central Government may specify the minimum amount of default of higher value which should not be more than Rs 1 lakh. 

The 14-member ILC was recently re-constituted by the government to study and make recommendations for the implementation of Part 3 of IBC. 

The DNA report quoted a senior government official as saying that the technology for the implementation of the scheme will be developed after the proposal passes through the committee process. 

The aim of the proposed Rs 60,000 debt waiver would be to give individuals like artisans, farmers and homebuyers, who are not in a situation to repay, a fresh start. If your outstanding amount is more than the Rs 60,000 limit, and your income above a certain threshold, then you would not qualify for the debt waiver. 

The proposed law will cover only the organised loan market. Hence, if you have taken a loan from non-formal sources like moneylenders, you would not be considered for the debt waiver, according to the report.