The Lok Sabha has approved the Insolvency and Bankruptcy Code (Amendment) Bill, which aims to accelerate insolvency processes for defaulting companies. This Bill mandates a 14-day timeline for accepting insolvency applications once a company’s default is confirmed. Finance Minister Nirmala Sitharaman highlighted that the government has proposed 12 amendments to strengthen the resolution ecosystem under the Insolvency and Bankruptcy Code.
The primary reason for delays in Insolvency and Bankruptcy Code resolutions, according to Sitharaman, is prolonged litigation. The Bill also suggests penalties to deter the misuse of the process. The Lok Sabha initiated discussions on the Bill presented by Finance Minister Nirmala Sitharaman on March 27. Initially, the Bill was referred to a Select Committee to address delays in resolving insolvency and bankruptcy cases.
Sitharaman emphasized in the Lower House that the Insolvency and Bankruptcy Code has significantly enhanced the banking sector’s health. She clarified that the law was not designed solely for debt recovery but to improve credit discipline. The Finance Minister, while introducing the Bill in the Lok Sabha, credited the IBC for fostering better credit practices and governance among companies emerging from insolvency proceedings.
The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, as reviewed by the Select Committee, was the subject of Sitharaman’s response. She underscored that the IBC, operational since 2016, has been pivotal in bolstering India’s banking sector. Sitharaman reiterated that the IBC primarily focuses on rescuing viable businesses and resolving financial distress while maintaining enterprise value, rather than being a debt recovery tool.
