Union Finance Minister Nirmala Sitharaman on Monday said that the Insolvency and Bankruptcy Code (IBC) has been a key and crucial factor in improving the health of India's banking sector.

Sitharaman's comments came during a discussion on the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, was passed at the Parliament with voice vote.

The Lok Sabha on Monday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025'' as reported by the Select Committee. The Bill seeks to further amend the Insolvency and Bankruptcy Code, 2016.

Piloting the Bill for further amendments at the Lok Sabha, Sitharaman stressed that companies have been doing well and their corporate governance practices have also improved after coming out of the insolvency resolution process.

“Insolvency and Bankruptcy Code (IBC) has been main factor in improving India's banking sector,” she said. With the amended code, the government aims “to maximise value and improve governance processes”.

Speaking on the Bill before its passing, Sitharaman said that the proposed amendments to IBC provide enabling provisions for group, cross border insolvency processes.

The IBC (Amendment) Bill has proposed 12 amendments to the IBC, which came into force in 2016.

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₹ 4.11 lakh crore recovered: Sitharaman Speaking further on the Bill, Nirmala Sitharaman said more than half of the NPAs (Non-Performing Assets) have been recovered by the banks through the resolution process that the IBC has.

“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.

Insolvency and Bankruptcy Code has led to better credit rating of companies, Sitharaman said, adding that it never intended to be a debt recovery tool.

Sitharaman addresses IBC resolution delays

Speaking on the controversial delays that the Opposition flagged, Sitharaman said that the primary reason for IBC resolution delays is extensive litigation.

She said that the new Bill proposes penalties to prevent abuse of process.

Sitharaman further noted that the IBC amendment Bill provides for mandatory admission of insolvency application within 14 days once the company's default is established.

The Centre had introduced the Bill in the Lok Sabha to amend the Insolvency and Bankruptcy Code (IBC) on 12 August 2025, proposing a slew of changes, including provisions to reduce the time taken for admission of insolvency resolution applications.

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The Bill was referred to a select committee of the Lok Sabha, which submitted its report in December 2025. It was introduced to address the delays and bring procedural amendments to the insolvency and bankruptcy of a company or individual.

IBC has been amended seven times so far. The government has been trying to resolve several challenges including timelines of resolutions and liquidations, resulting in value deterioration, low realisations to creditors and capacity constraints at NCLT.

During the discussion at the Lok Sabha earlier on Wednesday, the Opposition slammed the Bill, arguing it has failed to deliver timely resolutions due to tribunals' limited capacity overburdened with cases. Meanwhile, BJP MPs defended the 2016 law and accused the opposition of clinging to “license raj” mindsets from the Nehruvian and Indira Gandhi eras.