Finance Minister Nirmala Sitharaman has affirmed that the Insolvency and Bankruptcy Code (IBC) is a pivotal force in enhancing the health of India’s banking sector and significantly improving the recovery of non-performing assets.
Illustration: Dominic Xavier/Rediff
Key Points
- Finance Minister Nirmala Sitharaman highlighted the Insolvency and Bankruptcy Code (IBC) as a crucial factor in improving the health of India’s banking sector.
- The IBC has been instrumental in the recovery of more than half of the Non-Performing Assets (NPAs) by banks.
- Companies undergoing insolvency resolution have shown improved performance and corporate governance post-resolution.
- The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, proposes 12 amendments, including provisions to reduce the time for admitting insolvency applications.
- The IBC, enacted in 2016, has been amended seven times to date, reflecting ongoing efforts to refine its effectiveness.
Finance and Corporate Affairs Minister Nirmala Sitharaman on Monday said in the Lok Sabha that the Insolvency and Bankruptcy Code (IBC) has been a main and very crucial factor in improving the health of the country’s banking sector, including recovery of non-performing assets.
Impact on Corporate Governance and NPAs
Piloting a bill for further amending the IBC in the Lok Sabha, the minister stressed that companies have been doing well and their corporate governance practices have also improved after coming out of the insolvency resolution process.
She made the remarks while replying to the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, as reported by the Select Committee.
The IBC has been a main and very crucial factor in improving the health of the country’s banking sector, Sitharaman said, adding that more than half of the NPAs (Non-Performing Assets) have been recovered by the banks through the resolution process.
Proposed Amendments and Legislative Journey
The Bill has proposed 12 amendments to the IBC, which came into force in 2016.
On August 12, 2025, the government introduced the Bill in the Lok Sabha to amend the Insolvency and Bankruptcy Code (IBC), proposing a raft of changes, including provisions to reduce the time taken for admission of insolvency resolution applications.
The Bill was referred to a select committee of the Lok Sabha, which submitted its report in December 2025.
IBC has been amended seven times so far.
