New Delhi: The Insolvency and Bankruptcy Code (IBC) has positively impacted India’s banking sector, according to Finance Minister Nirmala Sitharaman. Recently, Parliament passed the IBC (Amendment) Bill, 2026, updating the original law established in 2016. This update comes after multiple amendments aimed at adapting to the needs of our evolving economy.
Sitharaman highlighted that a World Bank report from 2019 noted improvements in creditor recovery rates due to the IBC. The recovery rate jumped from 26.5 cents to 71.6 cents on the dollar, showcasing the effectiveness of these reforms. Over the years, banks have recovered a total of ₹1,04,099 crore, with the IBC alone contributing ₹54,528 crore, or about 52.3% of that total.
The minister stressed that the IBC’s goal is not to liquidate companies but to help them recover. It aims to address financial stress, enabling companies to bounce back. However, some companies may still end up in liquidation if no resolution is feasible despite several attempts.
The latest amendments focus on speeding up insolvency applications by streamlining processes. The bill favors using information utilities and sets timelines for adjudication, reducing delays. Additionally, it enhances oversight during the liquidation process, ensuring liquidators operate independently and that procedural overlaps are minimized.
Another significant change is the move from the existing fast-track process to a creditor-initiated framework. This new approach allows for out-of-court initiation and includes oversight measures for creditors to maintain control.
The amendments also introduce provisions for Micro, Small, and Medium Enterprises (MSMEs), allowing existing business promoters to remain involved in the resolution processes. This step is crucial for keeping small businesses afloat during tough times, giving them a fighting chance even when facing insolvency.
Overall, the IBC is designed to balance the interests of creditors and struggling businesses. It reflects a broader effort to sustain economic growth while ensuring accountability and financial stability in the banking sector.
For further insights on the impact of the IBC, you might want to check the World Bank’s overview.
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RAJYA SABHA, INDIAN BANKING SECTOR, NIRMALA SITHARAMAN, IBC HELPS IMPROVING HEALTH OF INDIAN BANKING SECTOR SAYS SITHARAMAN
