#IBC #EaseOfDoingBusiness #IndiaEconomy #BankingReforms #AssetRecovery #CorporateGovernance #FinancialStability #InsolvencyCode #InvestmentClimate
New Delhi – The Insolvency and Bankruptcy Code (IBC) has emerged as one of India’s most transformative economic reforms, significantly strengthening the country’s insolvency resolution framework, improving recoveries for creditors, and enhancing the ease of doing business. Since its implementation in 2016, the IBC has gone through continuous evolution with multiple legislative amendments and regulatory refinements. Today, it is widely seen as a cornerstone of India’s financial and corporate governance landscape.
As of March 31, 2025, a total of 1,194 companies have been successfully resolved under the IBC framework. Through these resolutions, creditors realized an impressive ₹3.89 lakh crore — a recovery figure that stands at over 170% of the liquidation value and more than 93% of the fair value of the companies admitted into the process. This remarkable recovery rate highlights the Code’s ability to maximize asset value and provide creditors with a viable mechanism for addressing financial distress.
A Game-Changer for India’s Banking Sector
The IBC’s impact is particularly evident in India’s banking system. The latest RBI Financial Stability Report (June 2025) noted that Gross Non-Performing Assets (GNPAs) fell to 2.3% — their lowest level in decades. By creating a structured and time-bound mechanism for resolution, IBC has contributed to cleaning up bank balance sheets, enhancing capital adequacy, and restoring investor confidence.
According to the RBI’s Report on Trends and Progress of Banking in India 2023–24, Scheduled Commercial Banks (SCBs) recovered ₹96,325 crore through various channels. Notably, the IBC channel accounted for ₹46,340 crore, representing 48.1% of total recoveries. This underscores the IBC’s dominance as the single most effective recovery mechanism among all available legal and financial avenues.
Legislative and Regulatory Strengthening
Since its inception, the IBC has undergone six legislative amendments and over 100 regulatory changes to strengthen its effectiveness and minimize procedural delays. These reforms have streamlined resolution timelines, improved transparency, and addressed practical challenges raised by stakeholders.
Some of the key changes include:
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Simplification of the corporate insolvency resolution process (CIRP).
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Strengthened rights and accountability of creditors’ committees.
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Mechanisms to curb frivolous litigation that delays resolution.
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Clearer rules for liquidation, fast-track cases, and pre-packaged insolvency.
Together, these improvements have reinforced the IBC as a dynamic, evolving framework capable of adapting to India’s rapidly changing business environment.
A Shift in Corporate Behaviour
Perhaps one of the IBC’s most profound impacts has been the behavioural change among companies and debtors. The threat of losing ownership and management control in case of default has significantly altered the dynamics between debtors and creditors. Borrowers are now more proactive in meeting obligations, and early settlements have become more common.
This “credit discipline” effect has not only helped lenders but also promoted a more responsible corporate culture, reducing moral hazard and opportunistic defaults.
Building Capacity and Global Engagement
Recognizing that insolvency resolution requires skilled professionals, the Insolvency and Bankruptcy Board of India (IBBI) has focused on capacity-building initiatives. In FY 2024–25, IBBI conducted workshops, webinars, and conclaves to enhance the practical skills of insolvency professionals (IPs).
Moreover, collaborations with global institutions such as the World Bank, International Finance Corporation (IFC), and Indian Institute of Corporate Affairs (IICA) have brought international best practices into India’s insolvency ecosystem. High-profile conferences at IIM Ahmedabad, IIM Bangalore, and ISB Hyderabad connected Indian IPs with global experts, enriching their knowledge and preparing them for complex cases.
Government’s Commitment
Minister of State for Corporate Affairs, Shri Harsh Malhotra, emphasized in Parliament that the IBC is not just a recovery tool but also a broader economic reform that promotes entrepreneurship, availability of credit, and a balanced approach to stakeholder interests. The government’s proactive role in refining the framework reflects its commitment to ensuring that the insolvency ecosystem remains robust, efficient, and aligned with global standards.
Looking Ahead
The future of IBC lies in further speeding up resolution timelines, leveraging technology, and enhancing cross-border insolvency mechanisms to attract greater foreign participation. Experts believe that with sustained reforms and capacity building, IBC can continue to be a catalyst for India’s economic growth, strengthening the financial sector and fostering investor trust.
As India aims to position itself as a global hub for investment and business, the IBC stands out as a reform that has improved asset recovery, promoted credit discipline, and reduced systemic risks. Its success story underlines India’s resolve to create a fair, transparent, and investor-friendly economic environment.
Key Highlights at a Glance:
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1,194 companies resolved under IBC till March 2025.
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₹3.89 lakh crore recovered by creditors (170% of liquidation value, 93% of fair value).
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GNPAs at 2.3%, lowest in decades.
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IBC accounted for nearly half (48.1%) of total bank recoveries in FY 2024–25.
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6 legislative amendments and 100+ regulatory changes implemented.
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Significant behavioural shift in debtor-creditor dynamics.
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#IBC #EaseOfDoingBusiness #IndiaEconomy #BankingReforms #AssetRecovery #CorporateGovernance #FinancialStability #InsolvencyCode #InvestmentClimate
