NEW DELHI: The decade-old insolvency framework has helped creditors recover more than Rs 4 lakh crore and sharply improved recovery rates and credit discipline, with the government and regulators hailing the Insolvency and Bankruptcy Code (IBC) as one of the country’s most significant economic reforms.
Marking 10 years of the Insolvency and Bankruptcy Code, 2016, the Insolvency and Bankruptcy Board of India (the insolvency regulator) said the law has transformed India’s stressed asset resolution ecosystem by replacing a fragmented and delay-ridden regime with a creditor-driven and time-bound insolvency process.
“As of March 2026, 1,419 cases had yielded resolution plans and the process facilitated realisation of over Rs 4 lakh crore for creditors,” IBBI chairman Ravi Mital said in a note commemorating the 10-year milestone of the Code.
The recoveries made through resolution plans were equivalent to 95% of the fair value and 167% of the liquidation value of the underlying assets, highlighting the value preservation achieved under the insolvency framework.
Since the Code came into force in 2016, a total of 8,987 corporate insolvency cases have been admitted till March 2026, of which 7,102 cases have been closed. Among the closed cases, around 4,099 companies — nearly 58% — were rescued through resolution, settlement, withdrawal or appeal processes, while 3,003 companies went into liquidation.
The IBBI said nearly 42% of the companies resolved under the IBC were either defunct or had earlier been referred to the erstwhile Board for Industrial and Financial Reconstruction (BIFR), underscoring the Code’s role in reviving financially distressed businesses.
One of the biggest impacts of the IBC, according to the regulator, has been the change in borrower behaviour and repayment culture. More than 30,000 cases filed before the National Company Law Tribunal (NCLT) were settled even before admission into insolvency proceedings, involving claims worth nearly Rs 14 lakh crore.
“These settlements demonstrate the deterrent effect of the Code and how it has altered debtor-creditor dynamics by encouraging early resolution of financial stress,” the IBBI said.
The regulator also linked the IBC’s success to the sharp improvement in banking sector asset quality. Gross non-performing assets (NPAs) of banks have fallen to 2.1% as of September 2025 from nearly 11.8% in 2017, according to the Reserve Bank of India.
The RBI, in its latest Report on Trend and Progress of Banking in India, termed the IBC the most effective recovery channel for banks. Scheduled commercial banks recovered Rs 1.04 lakh crore through various mechanisms in FY25, of which nearly Rs 54,000 crore — or 52.4% — came through the IBC route.
However, the recovery rate under the insolvency framework has been just around 30% of the admitted claims at the end of FY26, which analysts say is bit of a concern.
According to the IBBI, average recovery rates have improved from around 15-20% in the pre-IBC era to nearly 30% after the Code’s implementation, while average resolution timelines have come down from six-eight years earlier to around two years under the current framework.
Studies conducted by leading management institutes also point to improving post-resolution performance of companies resolved under the IBC.
A study by Indian Institute of Management Bangalore found a significant improvement in repayment behaviour after implementation of the Code, with overdue loan accounts increasingly returning to normal status between 2018 and 2024. The average period for which accounts remained overdue also fell sharply to 30-87 days from 248-344 days earlier.
Another study by Indian Institute of Management Ahmedabad found that companies resolved under the IBC witnessed substantial operational revival over the five years following resolution. Average sales of resolved firms rose by nearly 89%, while asset turnover ratios improved by around 131%. Capital expenditure by resolved firms increased by about 106% over the same period.
The study also showed that the aggregate market valuation of resolved listed entities increased from about Rs 2.8 lakh crore to nearly ₹9 lakh crore within five years of resolution, signalling stronger investor confidence and improved long-term viability of rescued businesses.
Despite the progress, experts say the insolvency ecosystem still faces challenges, including delays in litigation, capacity constraints at NCLTs and haircuts in certain large accounts. However, the government and regulators maintain that the framework continues to evolve through judicial precedents and regulatory refinements.