The personal insolvency law, which has not been made operational even after three years of completion of a corporate insolvency process, may finally see the light of day. Ministry of Corporate Affairs (MCA) Secretary Injeti Srinivas informed this on the third annual day celebration of the Insolvency and Bankruptcy Board of India (IBBI) in Delhi.
The MCA Secretary said that personal insolvency is a large subject as it would bring every kind of borrower under its ambit, and hence the government is planning to roll it out in phases. "In the first phase, we will cover the personal guarantor to a corporate debtor. This is almost ready to roll out. Next could be a fresh start process, which is basically giving relief to very small borrowers who are not in a position to repay debt. That may take another four-six months," he said.
After that, IBBI and the government will implement the insolvency law proprietorship, partnerships and others. He informed that personal insolvency may be fully operational in a year. Debt recovery tribunal (DRTs) would be the adjudicating authorities for personal insolvency matters.
For very small loan exposure, the government is looking at a non-adjudicated process, necessarily an online process, which would be based on the verification of facts like assets, monthly income, etc. Based on the verification, solvency or insolvency of a person/entity would be determined and relief would be given.
Among other major agendas for the government in the insolvency and bankruptcy space are the cross-border and group insolvency. "Cross-border insolvency is ready with the framework and is based on UNCITRAL Model Law. We are very hopeful in the winter session this law would be passed in Parliament," said Srinivas.
Group insolvency would also be addressed by looking at the international best practices, he said.
He also said the government is keen on developing a market place for stressed assets, which will ensure maximum competition and participation of foreign players. The move will also ensure these assets get maximum value and stressed companies get the best people to revive and run them, he added.