MICROCAPITAL BRIEF: Government of India May Waive Microfinance Debt for “Small Distressed Borrowers”

The Indian government reportedly is planning a debt waiver program for “small distressed borrowers” under the country’s insolvency and bankruptcy code. While the criteria under which a borrower would qualify for the program remain under discussion, potential parameters include: a gross annual income of less than INR 60,000 (USD 837), assets of less than INR 20,000 (USD 278), and debt of less than INR 35,000 (USD 486). It is unclear whether or how borrowers would be required to claim hardship in order to secure a waiver. Those receiving the waiver, however, would be barred from receiving another waiver for five years.

Corporate Affairs Secretary Injeti Srinivas was quoted as saying, “We had discussions with microfinance industry and their concerns are being duly factored in. The idea is not to destroy the microfinance industry. The idea is to give waiver for small distressed borrowers from debt obligations based on a criteria. The criteria has been discussed at length with the microfinance industry.”

By Eugene DeCosse, Research Associate

Sources and Additional Resources

Livemint article
https://www.livemint.com/news/india/govt-plans-debt-waiver-for-small-distressed-borrowers-under-insolvency-law-1566113815629.html

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