IBC helped banks recover 52% bad loans: Nirmala Sitharaman

New Delhi: Finance and corporate affairs minister Nirmala Sitharaman on Monday said the decade-old insolvency law has been instrumental in improving the health of the country’s banking sector by rescuing stressed firms and ensuring recovery of bad loans, as the Lok Sabha passed a bill to amend the legislation.

Replying to a discussion on Insolvency and Bankruptcy Code (IBC) Amendment Bill, 2025, in the lower house, Sitharaman said it rolls out new resolution frameworks, stipulates strict timelines and streamlines processes to expedite the rescue of stressed firms.

The IBC alone accounted for 52.3% of the total recovery of ₹1,04,099 crore by banks from bad debt through various channels in FY25, Sitharaman said.

The minister said the Bill puts in place a new creditor-initiated insolvency resolution process (CIIRP) framework, featuring “out-of-court initiation, debtor-in-possession and creditor-in-control model”. It will co-exist with the extant insolvency resolution process under the IBC. The bill also introduces an enabling framework for resolving group insolvency and cross-border bankruptcy cases.