As IBC completes 10 years, FM says it strengthened financial system
New Delhi, May 28
Union Finance Minister Nirmala Sitharaman said the Insolvency and Bankruptcy Code has strengthened India's financial system and helped in the faster revival of distressed businesses as the insolvency law completed 10 years of implementation.
In a social media post, the Finance Minister said the Insolvency and Bankruptcy Code, 2016 marked a decisive shift from a fragmented and debtor-controlled process to a unified, creditor-driven and time-bound resolution framework.
"The Insolvency and Bankruptcy Code, 2016 marked a decisive shift from a fragmented, debtor-controlled process to a unified, creditor-driven and time-bound resolution framework. IBC has strengthened India's financial system and supported the faster revival of distressed businesses," Sitharaman stated.
She added that the IBC changed India's approach towards business distress from "delay and uncertainty to resolution and revival" and strengthened confidence among creditors, investors and enterprises.
According to the Finance Minister, the evolution of the IBC over the last decade reflects the government's commitment towards strengthening India's economic institutions and improving the country's financial reform architecture.
The Insolvency and Bankruptcy Code, 2016 is India's primary bankruptcy law that provides a unified legal framework for the time-bound resolution of insolvencies involving companies, partnership firms and individuals.
The insolvency law has undergone multiple amendments since its introduction in 2016, with the latest structural reforms introduced through the Insolvency and Bankruptcy Code (Amendment) Act, 2026.
Meanwhile, rating agency ICRA in its latest note stated that there is sharp decline in IBC recoveries in 2025-26 and the resolution time remains stretched.
It further noted that recoveries against admitted claims reduced sharply to 23 per cent in 2025-26 compared to 46 per cent in 2024-25.
The report stated that recoveries declined significantly during the second half of 2025-26, falling to 22 per cent from 63 per cent recorded during the corresponding period of 2024-25.
According to ICRA, since the introduction of the IBC in 2016, a total of 8,987 corporate debtors have been admitted under the insolvency process.
Out of these, around 64 per cent of the Corporate Insolvency Resolution Processes had been resolved either through successful resolution plans, withdrawals or liquidation by March 2026.
— ANI
Reader Comments
Happy to see the FM acknowledging IBC's role in strengthening our financial system. The shift from "delay and uncertainty" is real - my father's small business was stuck in legal limbo for years before IBC came. Now there's hope for faster resolution.
Good framework on paper but ground reality is different. ICRA report shows recoveries dropped sharply - only 22% in second half of 2025-26. Delays in NCLT and appeals dragging on for years. Need faster courts and less interference from promoters challenging every step.
As someone who works in finance in Mumbai, IBC has definitely improved the credit culture. Lenders are more confident now. But the 64% resolution rate (including liquidation) is misleading - many cases end up in liquidation which kills value. Need better revival mechanisms.
I'm an economist and IBC's 10-year journey shows India's institutional maturity. Moving from a debtor-friendly system to creditor-driven resolution was bold. But the 2026 amendment needs rigorous implementation - especially to prevent related-party transactions that dilute value.
IBC is good but not perfect. The ICRA data shows recoveries falling - was only 23% in 2025-26. Resolution time still stretched despite the 330-day limit. Also, small businesses get caught in lengthy processes. Need a simpler chapter for MSMEs under IBC.
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