IBC strengthened India's financial system: FM Sitharaman on 10 years

FM Nirmala Sitharaman lauded the IBC for strengthening India's financial system. In contrast, an ICRA report highlights a sharp decline in recoveries under the code and notes that resolution times remain stretched.

IBC Strengthens Financial System: Sitharaman

Union Finance Minister Nirmala Sitharaman said the Insolvency and Bankruptcy Code (IBC) 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.

ICRA Report Highlights Declining Recoveries

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)

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