Finance Minister Nirmala Sitharaman said the government has proposed 12 amendments to the Insolvency and Bankruptcy Code (Amendment) Bill to further strengthen the resolution mechanism.
Sitharaman said the main reason for delay in IBC resolution is extensive litigation, and the IBC Bill has provisions for penalties to prevent abuse of process.
The bill introduced by Finance Minister Nirmala Sitharaman was discussed in the Lok Sabha on March 27. The Bill, which was earlier referred to a select committee, has been brought in to remove the delay in disposal of insolvency cases of a company or individual.
Finance Minister Sitharaman said in the House that the Bankruptcy Code (IBC) has played an important role in improving the condition of the banking sector, while also emphasizing that the law was never intended to act as a debt recovery mechanism.
Introducing the bill in the Lok Sabha, the Finance Minister said the IBC has contributed to better credit discipline and improved the credit profile of companies.
The minister said that after coming out of the bankruptcy resolution process, the performance of the companies has been good and their corporate governance practices have also improved.
The Finance Minister made this statement in response to the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, presented by the Select Committee.
“The Insolvency and Bankruptcy Code, which came into effect in 2016, has been a major factor in improving the overall health of the Indian banking sector,” Sitharaman said. He further said that this framework has also helped companies achieve better credit ratings over time.
Also, he said that the objective of this law is to resolve distressed assets and not just to recover the dues.
He clarified, “IBC is a framework to address financial distress while rescuing viable businesses and preserving enterprise value. IBC was never intended to be a debt recovery instrument.”
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