Insolvency & Bankruptcy Code (Amendment) Bill, 2025

On 30th March 2026, the Lok Sabha passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, introducing key reforms to strengthen India’s insolvency resolution framework.

Key Points

Objective of Amendments:
- Improve efficiency and governance in insolvency resolution.
- Align the Insolvency and Bankruptcy Code, 2016 with global best practices.
- Maximise value for stakeholders.
Key Changes Introduced:
- Replacement of fast-track process with creditor-led framework for small firms.
- Introduction of out-of-court settlement provisions.
- Adoption of debtor-in-possession model with safeguards.
Structural Reforms:
- Provisions for group insolvency.
- Cross-border insolvency framework for multi-jurisdiction cases.
Transparency Measures:
- Committee of Creditors (CoC) must record reasons for decisions.
- Enhances accountability in the resolution process.
Select Committee Role:
- 11 recommendations submitted in December 2025.
- All accepted by the government, with one additional provision added.
Impact on Banking Sector:
- Total recoveries: ₹1,04,099 crore.
- IBC contribution: ₹54,528 crore (~52.3%).
- Strengthened resolution of stressed assets.
Government’s View:
- Helps sustain stressed companies as going concerns.
- Improves financial system stability.
Significance:
- Strengthens investor confidence.
- Enhances ease of doing business.
- Makes insolvency resolution more efficient, transparent, and time-bound.