Universal Debt Relief Scheme for Poor: Features, Benefits
Government of India has planned a universal debt relief scheme (loan waiver) for small entrepreneurs.
Scheme Name: Universal Debt Relief Scheme for small Indian borrowers.
Expected Launch: Implementation will start when the next government takes charge in the end of May 2019/starting June 2019, after the election results are declared on 23rd May 2019. And implementation will take 3 months.
To bail out borrowers under small ticket loan category
Who will get debt relief?
Individuals from following categories will benefit:
- Small farmers
- Cottage industries
What is the cap on debt relief?
In order to get debt relief:
- Individual must have yearly income of less than Rs. 60,000
- Loan amount due is not greater than Rs. 35,000
- Individual’s asset should be less than Rs. 20,000
Features & Benefit of Universal Debt Relief Scheme
- Million individuals with small loan amount size are expected to benefit from the scheme
- Eligible business owners will get debt relief
- After getting relief, the same individual can re-start a new initiative
- Since loan waiver means negative impact on the credit score, individuals will be given an option to opt out to protect their credit history
- Individuals who want to opt out of the scheme will be welcomed.
Working of the scheme:
Online platform will be created for this loan waiver scheme for poor. Changes will be made to the Insolvency and Bankruptcy Code (IBC).
How much it will cost government?
The total cost of the scheme is estimated to be around Rs. 20,000 Crore.
How will loan waiver application will be investigated?
Government will allot a special team to investigate the applicant’s claim which will include all the document verification related to his/her business/work.
Who is working on the scheme?
Ministry of Corporate Affairs (MCA) and Insolvency and Bankruptcy Board of India (IBBI).