New Delhi, May 28 (IANS) The Insolvency and Bankruptcy Code, 2016 has significantly strengthened India’s insolvency and credit ecosystem since its enactment, improving recovery mechanisms, boosting creditor discipline and creating a more structured resolution process for distressed entities, according to an official factsheet released on Thursday.

As of March 2026, creditors realised approximately Rs 4.32 lakh crore through approved resolution plans under the IBC. Recoveries exceeded 116.85 of liquidation value and more than 94.56 per cent of fair value, the data showed.

The framework also improved recovery outcomes for the banking sector. The RBI’s ‘Report on Trends and Progress of Banking in India for 2024-25’ (released on December 29, 2025) highlights that out of a total of Rs 1,04,099 crore recovered by scheduled commercial banks through various channels, the IBC alone has contributed a significant Rs 54,528 crore, accounting for 52.4 per cent of the total recoveries. This was higher than recoveries through SARFAESI, Debt Recovery Tribunals and Lok Adalats.

The factsheet cites studies carried out by IIM Ahmedabad and IIM Bengaluru to highlight the successful resolution of bankruptcy cases under the IMC.

An IIM Ahmedabad study reveals strong post-resolution recovery among resolved firms under the IBC. Creditors recovered 32 per cent of admitted claims and 168 per cent of liquidation value. Resolved firms saw 76 per cent sales growth, reached operational break-even by the third year and experienced a 50 per cent rise in employee expenses meaning higher employment.

According to the fact-sheet, total assets of the resolved companies grew by 50 per cent, capital expenditure rose 130 per cent, and profitability aligned with industry benchmarks.

Market valuations tripled from Rs 2 lakh crore to Rs 6 lakh crore for the listed firms, while liquidity improved by 80 per cent. Additionally, an IIM Bangalore study shows a 3 per cent reduction in the cost of debt and improved governance through increased independent directors.

Thus, these studies demonstrate that firms undergoing resolution through the IBC process have shown significant improvements in various aspects of their business, including sales, profitability, asset growth, market valuation and liquidity.

Further, the impact of the IBC on credit discipline has also been corroborated by a comprehensive study conducted by IIM Bangalore. The study analysed data on corporate loan accounts, CIRP, firm-level financial data and NPA data. It found that IBC has prompted borrowers to adhere to stipulated loan payment schedules.

During the period under review, the study notes a significant reduction in loan accounts deemed ‘Overdue’, both in terms of the Rupee amount as well as in terms of the number of accounts. Similarly, the yearly proportion of transitions of loan accounts from the ‘Overdue’ category to the ‘Normal’ category have increased, supporting the view of an improvement in the credit culture of corporates.

Even the average number of days that a loan account stays in ‘Overdue’ category before transitioning to ‘Normal’ category has reduced from 248-344 days to 30-87 days. This shows that both debtors and creditors are trying to resolve the delinquencies at the earliest.

At the same time, operational challenges continued to remain. Average resolution timelines in several cases exceeded the statutory limit of 330 days. Delays in adjudication and prolonged litigation affected value maximisation in some proceedings, showed the data.

Despite these challenges, the IBC is a major structural reform in India’s financial and corporate resolution framework. Subsequent amendments, including the Insolvency and Bankruptcy Code (Amendment) Act, 2026, seek to further improve timelines, institutional efficiency and recovery outcomes, the official statement added.

–IANS

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