The Parliament has passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2026, with the Rajya Sabha approving it today with a voice vote. Minister of State for Corporate Affairs Harsh Malhotra moved the Bill, which aims to further amend the Insolvency and Bankruptcy Code 2016. The Bill also seeks to address procedural delays and interpretational issues among companies and individuals.
Replying to the discussion on the Bill, Finance Minister Nirmala Sitharaman said that the IBC framework said that the Insolvency and Bankruptcy Code was never intended to function merely as a debt recovery mechanism but as a framework to rescue viable businesses, resolve financial stress and preserve enterprise value. She said the IBC Amendment Bill has a total of 12 amendments, including 11 recommended by the Select Committee and one introduced by the government. Speaking about the Bill, the Minister said that the Insolvency and Bankruptcy Code has been a key factor in improving the health of India’s banking sector, particularly in resolving stressed assets. She emphasized that the law was never intended to function merely as a debt recovery mechanism.
Responding to concerns raised by several members over low recovery rates under the IBC, the Finance Minister said such criticism misunderstands the very purpose of the law. Citing official data, Ms Sitharaman said the IBC has facilitated the resolution of one thousand 376 companies, enabling creditors to recover 4.11 lakh crore rupees. She added that financial creditors have recovered more than 64% of their claims under the process. She informed the House that the commercial banks have recovered a total of over one lakh four thousand crore rupees from NPAs, and out of this, the IBC alone contributed more than 54 thousand 528 crore rupees.
The Minister said that the government has brought the amendments in the Insolvency and Bankruptcy Code, 2016, to further strengthen the existing insolvency framework. Mrs Sitharaman said these changes aimed to address practical challenges, incorporate evolving global best practices, and reflect the experience gained since the law’s implementation in 2016. Highlighting a key amendment, the Minister said the look-back period for avoidance transactions has been expanded to two years prior to the date on which the insolvency petition is filed before the adjudicating authority. She also pointed to a new transparency measure introduced after the Select Committee’s recommendations, under which the Committee of Creditors will be required to record the reasons for selecting the successful resolution applicant. Calling it an important reform, the Minister said the government had accepted the recommendation in full to make the process more transparent and remove doubts in the minds of stakeholders. The Finance Minister highlighted the government’s crackdown on economic offenders, saying stringent action under the Fugitive Economic Offenders Act and the Prevention of Money Laundering Act PMLA has led to major recoveries for public sector banks and stronger accountability in large fraud cases.
The Minister said the Fugitive Economic Offenders Act has enabled the government to take a range of coercive actions against absconding economic offenders, including confiscation of properties identified as proceeds of crime and attachment of benami assets. She said the Enforcement Directorate (ED) has actively pursued bank fraud cases linked to insolvency and financial misconduct. The Minister informed that the ED has investigated over one thousand bank fraud cases under the PMLA, while proceeds of crime worth nearly 65 thousand crore rupees have been attached. She added that 150 accused have been arrested and 277 prosecution complaints have been filed in these matters. The Minister further informed the House that eight accused have been declared Fugitive Economic Offenders under the law, reflecting the government’s use of the legislation against high-profile defaulters and absconders. In a major recovery claim, Mrs Sitharaman said assets worth 15,186 crore rupees have been confiscated, of which over 15,183 crore rupees have already been restituted to public sector banks. She described this as a significant achievement, noting that banks had effectively received back substantial amounts that were earlier at risk due to fraud and wilful default.
Earlier, initiating the discussion, Rajeev Shukla of Congress said that the Insolvency and Bankruptcy Code (IBC) was introduced in 2016 to revive stressed and non-performing companies. He said the objective was to ensure that companies burdened with NPAs could be restructured, operations could resume, and jobs could be protected. He acknowledged that in its initial years, the IBC delivered strong results. India’s global ranking in insolvency resolution improved significantly from 136 to 52, indicating that the reform was effective and the system had strengthened. Mr Shukla, however, said that over time, the framework, which was originally meant to ensure speed, transparency, and value maximisation, is now struggling. He said delays, inefficiencies, and serious concerns regarding fairness and accountability have weakened the system.
Dr Radha Mohan Das Agarwal of the BJP said the gross Non-Performing Assets (NPAs) of Scheduled Commercial Banks stood at approximately 11.18% at the time of the implementation of this Code in 2016.
He said after the implementation of this legislation, the gross NPAs declined to 2.05% in September last year. Dr Agarwal said, in the case of Public Sector Banks, gross NPAs were as high as 14.58%, which dropped to 2.3% by September last year.
He further pointed out that during 2024-25, Scheduled Commercial Banks recorded their highest-ever profit of over four lakh crore rupees, while Public Sector Banks reported profits of one lakh 78 thousand crore rupees. The BJP MP said that before the introduction of the IBC framework, the recovery from stressed assets was limited to only 15 to 20%. However, after the establishment of insolvency mechanisms, the recovery rate improved significantly to 36.6% in 2024-25.
Sukenedu Sekhar Ray of TMC claimed that the Insolvency and Bankruptcy Code was brought in a hurried manner to make an exit route for defaulting companies to escape liabilities. He said, in the last nine years, six amendments were made in the IBC Act and 122 amendments in its regulations since its inception.
