New Delhi: On April 1, 2026, Finance Minister Nirmala Sitharaman highlighted the positive impact of the Insolvency and Bankruptcy Code (IBC) on India’s banking sector. The Rajya Sabha recently passed the IBC (Amendment) Bill, after approval from the Lok Sabha on March 30.
Sitharaman pointed out that the World Bank’s 2019 report showed significant improvements in creditor recovery rates in India—rising from 26.5 cents to 71.6 cents per dollar. She noted the IBC, enacted in 2016 and modified seven times, is recognized globally for its effectiveness.
“The IBC has played an important role in strengthening our banking system,” she explained. Since its introduction, banks have recovered ₹1,04,099 crore through various means, with ₹54,528 crore coming specifically from the IBC. That’s over half of all recoveries.
The minister emphasized that the IBC’s goal is not to shut down companies, but to provide solutions that help them recover and thrive. “It’s about managing stress in businesses to bring them back to health,” she stated, acknowledging that some firms may eventually face liquidation despite efforts.
Recent amendments aim to speed up the insolvency process, focusing on quick admission of cases and reducing delays. They also enhance the liquidation process with better oversight and clear separation of duties for liquidators. A noteworthy change is the replacement of the rarely used fast-track process with a framework that allows creditors to initiate insolvency outside the court setting. This also introduces provisions for group and cross-border insolvency, aligning with best practices worldwide.
Sitharaman mentioned that Micro, Small, and Medium Enterprises (MSMEs) now have exemptions from certain disqualifications under the IBC. This change allows existing business owners to be involved in the resolution process, protecting smaller enterprises from losing their businesses during insolvency.
These developments are crucial in a landscape where the global economic environment is rapidly changing. According to a recent survey by the National Association of State Bankruptcy Administrators, the number of businesses seeking bankruptcy protection has been steadily increasing, signaling that effective legislation like the IBC is more important than ever.
As the IBC evolves, its ability to adapt to economic needs will be key. This ongoing commitment reflects the government’s drive to support both large corporations and small businesses in navigating financial challenges successfully.
For more insights on the IBC and its economic implications, visit the World Bank for the latest research and data.
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RAJYA SABHA, INDIAN BANKING SECTOR, NIRMALA SITHARAMAN, IBC HELPS IMPROVING HEALTH OF INDIAN BANKING SECTOR SAYS SITHARAMAN
