The government is reportedly working on the rules for personal bankruptcy. This is ambition, indeed. Of course, there is nothing wrong with the concept. The problem is with the legal infrastructure India has in place: its size and capacity are puny in relation to the size of the population and the potential demand for bankruptcy proceedings.
True, our financial laws have loopholes that some errant individuals exploit, but there could also be genuine reasons for bankruptcy such as an economic downturn leading to loss of employment. So, giving some flexibility to individuals to restructure their loans makes sense.
The code would replace two archaic laws: the Presidency Towns Insolvency Act, 1909 (for the three erstwhile presidencies of C…
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