Individual bankruptcy: Draft rules propose mediation over litigation

For the first time in India, debtors and operational creditors will be able to trigger insolvency once the individual insolvency code is notified

The government is fine-tuning the draft rules for individual insolvency and is likely to introduce three categories of debt resolution based on the loan amount, a senior official told Business Standard. The focus, the official added, would be on resolution through mediation in most cases. 

“The current draft (for individuals) imitates the corporate insolvency procedures, which seems a bit disproportionate to the defaulter. We need to correct that,” the official said.

The entry-level debt of up to Rs 35,000 will not have to go through any adjudication process, with the ministry of corporate affairs (MCA) planning to put an online