IBC has been a game-changer, transformed the insolvency landscape: DFS secretary

New Delhi, Jan 28 (PTI) The Insolvency and Bankruptcy Code (IBC) has been a game-changer and has transformed the insolvency landscape by fostering transparency, accountability and efficiency in corporate dispute resolution and laying the foundation of a more resilient and robust economy, Financial Services Secretary M Nagaraju said on Wednesday.

"Despite these achievements, several challenges still remain, which include timelines of resolutions and liquidations, resulting in value deterioration, low realisations to creditors and capacity constraints at National Company Law Tribunal (NCLT)," he said while addressing an event organised by IBBI and Insol India.

The seventh amendment -- IBC Amendment Bill 2025, as recommended by the select committee, seeks to address some of these key challenges relating to delays in resolution and liquidation and low recovery rates, he said.

"The bill also proposes, inter alia, introduction of provisions on group insolvency process, cross-border insolvency and the creditor-initiated insolvency processes to strengthen and expand the framework of IBC," he said.

By incorporating these reforms, the amendment bill is expected to enhance the timelines and effectiveness of insolvency proceedings, improve greater confidence and align India's resolving regime more closely with the global best practices, thereby fostering greater stability and resilience in the financial system, he said.

To facilitate an expeditious resolution process under IBC and to ensure proper implementation of IBC, six amendments have been carried out in the IBC since its inception in 2016.

In addition to supplementing the efforts of the Ministry of Corporate Affairs and Insolvency and Bankruptcy Board of India (IBBI) in carrying out amendments in IBC, the Department of Financial Services (DFS) has also been undertaking several measures to expedite insolvency processes, Nagaraju said.

He also cited measures such as the periodic review of large accounts of public sector banks facing delays at various stages of the insolvency process and active collaboration with IBBI to cut down on delays and issuance of general advisories to banks on handling such cases.

Observing that IBC stands as one of the most landmark reforms introduced by the government in 2016, Nagaraju said, resolution plans have been approved in case of 1,300 corporate debtors, enabling creditors to realise about Rs 4 lakh crore in these cases as of September 2025.

This led to a decline in the gross NPA ratio of scheduled commercial banks to 2.05 per cent in September 2025 and net NPA to 0.52 per cent.

Also, public sector banks earned a net profit of Rs 1.41 lakh crore in FY24, which further increased to Rs 1.78 lakh crore in FY25.

The fear of losing control of the firm on initiation of a Corporate Insolvency Resolution Process (CIRP) is nudging debtors to settle their dues with the creditors as soon as possible, he said.

This may also be observed from the fact that up to March 2025, 30,310 applications for initiation of CRPs having an underlying default of Rs 13.78 lakh crore were resolved even before their admission in the NCLT, he added. PTI DP HVA