The Code commenced operation with corporate insolvency framework in late 2016. It has triggered a systemic response to the underlying attitudinal problems in the creditor-debtor relationship and is acting as a prophylactic for an acute condition. Being preventive in nature, the Code is being touted as having brought about a cultural shift in the dynamics between lenders and borrowers, and promoters and creditors. It has made an impact in the way repayment of debts are being viewed and treated by promoters and management of the defaulting firms. In the words of the Apex court, defaulters’ paradise is lost.

There is presently no standard framework to track the outcomes of insolvency and bankruptcy regime in various jurisdictions, other than the Ease of Doing Business indicators. A single metric or a composite of metrics often does not capture softer aspects such as humanitarian approach to dealing with insolvency, professional conduct of role players or behavioural changes of stakeholders. They also generally do not capture other systemic gains. It is essential to capture both quantifiable and non-quantifiable outcomes of the Code and effectiveness, efficiency, and efficacy of the processes leading to such outcomes.

The Code is an economic law, with the strappings of social and cultural norms. These norms are rather dominating in Part III of the Code which is applicable to partnerships and proprietorships, and natural persons. They are nothing but natural persons in a different manifestation. When operationalised, Part III of the Code will impact a billion plus Indian citizenry and millions of partnerships and proprietorships. While indeed there is need for an assessment of the performance of the corporate insolvency regime, it is imperative to prepare the foreground for effective implementation of the provisions of the Code relating to natural persons and their businesses.

It is well recognised that behavioural economics (BE) generates a more accurate understanding of human behaviour, and explains an economic agent’s choice. Decisions are made by individuals who are shaped by—and embedded in—social environments. Cognitive and affective (emotional) dimensions are also considered. The preferences of human beings are influenced by norms which is appropriate behavior or actions taken by the majority of people. Norms vary across cultures and contexts. Unmanageable debt burdens for individuals can cause a host of problems for debtors, their families and associated communities. Often, the notion of stigma of an individual’s bankruptcy relates to an idea that the debtor is someone who never intended to repay its financial obligations, committed fraud or plainly chose to ignore its financial obligation. Desire to relieve individual suffering is more direct and more central in the context of their insolvency. Insolvency relief for individuals is, therefore, expected to address the consequences of insolvency through the prism of humanitarian empathy. Bankruptcy should further the rehabilitative goals of behaviour modification. The Code should take into account such emotional, social and cultural notions when further developing and  implementing an insolvency framework for individuals.