NEW DELHI – Finance and Corporate Affairs Minister Nirmala Sitharaman informed the Lok Sabha on Monday that the Insolvency and Bankruptcy Code (IBC) has become the “crucial factor” in restoring the health of India’s banking sector.
Speaking during the discussion on the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, the Minister highlighted that the law has successfully helped banks recover more than half of their non-performing assets (NPAs).
Improving Corporate Health
Sitharaman emphasized that the IBC does more than just recover money; it revitalizes struggling businesses. She noted that companies emerging from the insolvency process are showing improved performance and stronger corporate governance practices.
The latest Bill proposes 12 new amendments to the original 2016 law. These changes are designed to streamline the system and significantly reduce the time it takes for insolvency applications to be admitted and processed.
A Path to Recovery
The IBC has already been amended seven times since its inception to keep pace with the evolving economy. The current 2025 Bill was first introduced last August and was recently reviewed by a select committee of the Lok Sabha, which submitted its final report in December.
As the government pushes for these new updates, the focus remains on ensuring that the banking sector stays resilient. By speeding up resolutions, the government aims to keep capital flowing through the economy, even as global markets face uncertainty.
