AUTOMATION OF PERSONAL INSOLVENCY: SCULPTING PAYMENTS BANKS AND ADJUDICATING AUTHORITIES FOR FRESH START PROCESS

The Insolvency and Bankruptcy Code 2016 has been held as a landmark economic reform of India. Unlike previous regimes, it provides time-bound resolution of insolvent entities by providing easy exit options. However, such ease of entry is not available for individuals facing personal insolvency, especially those with low income and assets. Furthermore, the present regime does not provide a single-window solution and imposes high transaction costs on the debtor, making the debt payment unsustainable. This can be seen from the fact that on 31 March 2014 (RBI), cases amounting to INR 1,415 billion were pending at the Debt Recovery Tribunal (DRT) – a designated adjudicating authority that'd implement personal insolvency. The present study addresses this issue using existing Payments Bank and Adjudicating Authority institutions. Both institutions will act as pillars towards an automated Fresh Start Process that'd give time-bound relief to the individual debtor. The paper further explores the strengths and weaknesses of executing this proposed model under a fresh start process.