IBC 2.0? Lok Sabha Passes Bill to Speed Up Resolutions, Strengthen Governance

The Lok Sabha on Monday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, with Union Finance Minister Nirmala Sitharaman stating that the Code has been a key factor in improving the health of India’s banking sector. The Bill seeks to further amend the Insolvency and Bankruptcy Code (IBC), 2016, and proposes 12 changes to the existing framework.

“Insolvency and Bankruptcy Code (IBC) has been a main factor in improving India’s banking sector,” Sitharaman said, adding that the amendments aim to “maximise value and improve governance processes”.

Speaking on the Bill, the Finance Minister said the proposed amendments introduce enabling provisions for group insolvency and cross-border insolvency processes. She added that more than half of non-performing assets (NPAs) have been addressed through the resolution process. “As of December 2025, the Insolvency and Bankruptcy Code (IBC) has facilitated the resolution of 1,376 companies, enabling creditors to recover ₹4.11 lakh crore,” she said.

Sitharaman also noted that the Bill mandates admission of insolvency applications within 14 days once a company’s default is established, in a bid to expedite proceedings.

What Is IBC?

The Centre had introduced the amendment Bill in the Lok Sabha on 12 August 2025, proposing a range of changes to reduce delays in the admission of insolvency resolution cases. The Bill was subsequently referred to a select committee of the Lok Sabha, which submitted its report in December 2025. The proposed amendments aim to streamline procedures governing insolvency and bankruptcy for companies as well as individuals.

The IBC has been amended seven times so far, as the government continues to address persistent challenges such as prolonged resolution timelines, liquidation delays, erosion of asset value, low recovery rates for creditors, and capacity constraints at the National Company Law Tribunal (NCLT).

During the Lok Sabha debate last week, Opposition members criticised the Bill, arguing that the IBC has struggled to ensure timely resolutions due to the heavy caseload and limited capacity of tribunals.