Individuals to get bankruptcy protection soon
Sources said the idea is to make the process more humane as the rules would deal with a host of individuals — from farmers and kirana shop owners to a salaried middle class person who may be struggling to repay a loan for reasons like loss of job.
"There is huge social stigma attached to this. So, you cannot be punitive. People should be allowed to restructure their lives, " said Sumant Batra, managing partner and head of the insolvency, secured transactions & corporate law practice at law firm Kesar Dass B & Associates.
There are laws dating back over a century to deal with individual bankruptcy but they have been used only sparingly in the last several decades. The jurisdiction mostly lies with district judges. Currently, banks approach Debt Recovery Tribunals (DRTs) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi), which are aimed at recovering the dues.