Executive Summary:
This document is a response from the Minister of State in the Ministry of Corporate Affairs to questions raised in Lok Sabha regarding the impact of the Insolvency and Bankruptcy Code (IBC) on ease of doing business. It highlights the achievements of the IBC, its impact on the banking sector, and steps taken to minimize delays and incentivize resolution professionals (IPs). The response includes data up to March 31, 2025, and references reports from the Reserve Bank of India (RBI) from June 2025 and December 2024.
Key Points / Main Content:
Achievements and Impact of IBC:
IBC has successfully resolved financially distressed companies, increasing creditor confidence and encouraging domestic and foreign investment.
As of March 31, 2025, 1,194 companies have been successfully resolved under the IBC framework.
Creditors have realised ₹3.89 lakh crore, which is 32.8% of the total admitted claims.
The realised amount is over 170% of the liquidation value and more than 93% of the fair value of these companies.
Impact on the Banking Sector:
Gross Non-Performing Assets (GNPAs) have significantly declined, reaching 2.3% at the end of March 2025.
Scheduled Commercial Banks (SCBs) recovered ₹96,325 crore through various channels, with the IBC contributing ₹46,340 crore (48.1% of total recoveries).
Minimising Delays:
Six legislative amendments to the IBC and over 100 changes to regulations have been introduced to strengthen the insolvency resolution framework and enhance procedural efficiency.
Positive Change in Credit Culture:
The IBC has led to a behavioural shift among companies and their debtors by creating a credible threat of losing ownership for defaulting companies.
Incentivising Resolution Professionals:
The Insolvency and Bankruptcy Board of India (IBBI) conducted workshops, webinars, and conclaves to enhance practical skills of IPs in FY 2024-25.
Collaborations with expert bodies like the World Bank, Indian Institute of Corporate Affairs (IICA), and International Finance Corporation (IFC) were undertaken for training and research.
International conferences at IIM Ahmedabad, IIM Bangalore, and ISB Hyderabad offered IPs exposure to best practices.
Impact Analysis:
Creditors:
Impact: Increased confidence in recovering dues from financially distressed companies through a structured and time-bound process.
Action Required: Utilize the IBC framework to resolve distressed assets and recover outstanding amounts.
Debtors:
Impact: Behavioral shift towards timely debt repayment to avoid losing ownership of the company.
Action Required: Maintain financial discipline and proactively address debt issues to avoid triggering the IBC process.
Banking Sector:
Impact: Improved overall health due to reduced Non-Performing Assets (NPAs) and increased recovery rates.
Action Required: Continue to leverage the IBC framework for resolving distressed assets and improving asset quality.
Resolution Professionals (IPs):
Impact: Enhanced skills and knowledge through workshops, webinars, and collaborations with expert bodies.
Action Required: Participate in training programs and workshops to enhance expertise and contribute effectively to the insolvency resolution process.
Government:
Impact: Improved ease of doing business in the country and strengthened the insolvency resolution framework.
Action Required: Continue to monitor and refine the IBC framework based on feedback and evolving needs of the economy.
Key Entities Referenced
Insolvency and Bankruptcy Code: A code to resolve financially distressed companies and encourage domestic and foreign investment.
SHRI KOTA SRINIVASA POOJARY: Member of Parliament who raised a question in the Lok Sabha.
HARSH MALHOTRA: Minister of State in the Ministry of Corporate Affairs and Minister of State in the Ministry of Road Transport and Highways.
Reserve Bank of India: Central bank of India, which publishes Financial Stability Reports and reports on banking trends.
Gross Non Performing Assets: An asset on the books of a lender that is not yielding income.
Insolvency and Bankruptcy Board of India: An entity that conducted workshops to enhance practical skills and collaborated with expert bodies for training and research.
World Bank: An international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects.
Indian Institute of Management Ahmedabad: An Indian business school, where international conferences were held to offer insolvency professionals valuable exposure to best practices.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 4138
ANSWERED ON MONDAY THE 18TH AUGUST, 2025/ SRAVANA 27, 1947 (SAKA)
IMPACT OF IBC ON EASE OF DOING BUSINESS
QUESTION
4138. SHRI KOTA SRINIVASA POOJARY:
SHRI VISHWESHWAR HEGDE KAGERI:
SHRI RAO RAJENDRA SINGH:
SHRI TEJASVI SURYA:
SHRI KHAGEN MURMU:
SHRI VISHNU DAYAL RAM:
SHRI JANARDAN MISHRA:
Will the Minister of CORPORATE AFFAIRS be pleased to state:
(a) the details of the major achievements of the Insolvency and Bankruptcy Code
(IBC) and impact on the ease of doing business in the country;
(b) the data regarding the recovery rate achieved by lenders under the IBC as
compared to the earlier insolvency regime/bankruptcy system;
(c) the data regarding the non-performing assets (NPAs) and its impact on the
banking sector after the implementation of the IBC along with the steps taken to
minimise delays occurring in applicants under IBC;
(d) the role of the IBC in bringing out a positive change in the credit culture in the
country; and
(e) the steps taken by the Government to incentivise resolution professionals who
are instrumental in dispute resolution?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS AND MINISTER OF
STATE IN THE MINISTRY OF ROAD TRANSPORT AND HIGHWAYS
[HARSH MALHOTRA]
(a)& (b): The major achievement of the Insolvency and Bankruptcy Code (IBC) has
been its ability to resolve financially distressed companies and realisation by the
creditors thereon. By offering a clear and time-bound framework for revival, the IBC
Page 1 of 2has strengthened creditor confidence and encouraged both domestic and foreign
investment. The IBC has played a pivotal role in improving the ease of doing business
in India by introducing a faster and more structured insolvency resolution process
maximising the value of assets, promote entrepreneurship, availability of credit and
balance the interests of all the stakeholders. As of March 31, 2025, a total of 1,194
companies have been successfully resolved under the IBC framework. Through these
cases, creditors have realised an amount of ₹3.89 lakh crore, which is 32.8% of the
total admitted claims, over 170% of the liquidation value and more than 93% of the fair
value of these companies, as assessed at the time of admission into the IBC process.
(c): IBC has played a crucial role in improving the overall health of India’s banking
sector. According to the latest RBI’s Financial Stability Report (June 2025), Gross Non-
Performing Assets (GNPAs) have significantly declined, reaching a multi-decadal low
of 2.3% at the end of March 2025. This reduction indicates a stronger, more stable
banking system. The RBI’s Report on Trends and Progress of Banking in India for 2023-
24 (released on December 26, 2024) highlights that SCBs recovered a total of ₹96,325
crore through various channels. Out of this, the IBC channel alone contributed a
significant ₹46,340 crore, accounting for 48.1% of the total recoveries. The
Government has undertaken six legislative amendments to the IBC and introduced over
100 changes to the regulations since its inception, to strengthen the insolvency
resolution framework and enhance procedural efficiency thus minimizing the delays.
(d): The IBC has led to a behavioural shift among companies and their debtors. By
creating a credible threat that defaulting companies might lose ownership, the Code
has fundamentally reshaped the dynamics between debtors and creditors.
(e): Several initiatives have been taken to build the capacity of insolvency
professionals (IPs). In FY 2024–25, the Insolvency and Bankruptcy Board of India (IBBI)
conducted a series of workshops, webinars, and conclaves to enhance practical skills.
It also collaborated with expert bodies like the World Bank, Indian Institute of
Corporate Affairs (IICA) and International Finance Corporation (IFC) for training and
research. Additionally, international conferences at Indian Institute of Management
(IIM) Ahmedabad, IIM Bangalore, and Indian School of Business (ISB) Hyderabad
brought together global experts, offering IPs valuable exposure to best practices.
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