IBC Amendment 2026 Passed to Strengthen Insolvency Framework
Why in the News ?
Parliament has passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2026, aiming to resolve procedural delays, enhance transparency, and strengthen the insolvency framework. The reforms seek to improve resolution efficiency, creditor recovery, and overall financial system stability.
Key Features and Amendments in IBC 2026:
● Introduces 12 amendments (11 by Select Committee + 1 by government) to address practical and legal gaps.
● Expands look-back period for avoidance transactions to 2 years before insolvency filing.
● Mandates Committee of Creditors (CoC) to record reasons for selecting a resolution applicant, improving transparency.
● Focuses on resolving interpretational issues and reducing procedural delays in insolvency cases.
● Reinforces IBC’s objective as a resolution mechanism, not merely a debt recovery tool.
Performance, Impact and Concerns
● IBC has resolved 1,376 companies, enabling recovery of ₹4.11 lakh crore.
● Financial creditors recovered ~64% of claims, showing improved efficiency.
● Gross NPAs of banks declined sharply from 11.18% (2016) to about 2% (2024).
● Recovery rates improved from 15–20% (pre-IBC) to around 36.6%.
● However, concerns remain over delays, inefficiencies, and fairness, with critics citing weakening outcomes over time.
| About IBC and Related Laws :● Insolvency and Bankruptcy Code (IBC), 2016: Consolidates laws for insolvency resolution of companies and individuals.● Objective: Time-bound resolution, value maximisation, and protection of creditor interests.● Key institutions: NCLT (adjudicating authority), Insolvency Professionals, and Committee of Creditors (CoC).● Related laws:○ Fugitive Economic Offenders Act, 2018 – allows confiscation of assets of absconders.○ Prevention of Money Laundering Act (PMLA) – tackles financial crimes and frauds.● Enforcement Directorate (ED) has investigated 1,000+ bank fraud cases, attaching assets worth ₹65,000 crore.● IBC improved India’s Ease of Doing Business ranking in insolvency from 136 to 52. |