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The Insolvency and Bankruptcy Code (IBC), the landmark legislation enacted in May 2016 to resolve corporate insolvency and non-performing loans (NPAs) in India, has completed 10 successful years. This law, counted among the biggest economic reforms in Indian banking and corporate world after independence, changed the decades-old “promoter-controlled” system to a “creditor-in-control” model.
According to data from the Insolvency and Bankruptcy Board of India (IBBI) and the Reserve Bank of India (RBI), scheduled commercial banks and financial creditors have recorded direct recovery of more than ₹4.32 lakh crore (₹4.32 trillion) through approved resolution plans in this decade. Whereas earlier cases under Sick Industrial Companies Act (SICA/BIFR) and Debt Recovery Tribunal (DRT) took 6 to 8 years to resolve and recovery was limited to only 15% to 20%, IBC has completely changed both the speed of resolution and the culture.
IBC’s official data of 10 years testifies to an unprecedented transformation in the Indian financial system:
| Main scale (Metric) | Total data for 10 years (2016 – 2026) | actual context and impact |
| Total Admitted Cases | 8,987 cases | Entered into Corporate Insolvency (CIRP) by NCLT |
| Closed Cases | 7,102 cases | Nearly 79% of total recorded cases closed successfully |
| Successful Resolution Plans | 1,419 companies | Saved from bankruptcy and restarted |
| Companies that went into liquidation | 3,003 companies | Where no buyer was found and the properties were sold |
| Total Direct Recovery (Realized by Creditors) | ₹4.32 lakh crore | 95% of fair value and 167% of liquidation value |
| Pre-Admission Settlement (Fear of IBC) | 30,000+ cases | Out-of-court settlement of dues of ₹14 lakh crore |
The biggest result of this strict law was that the Gross Non-Performing Asset Ratio (Gross NPA Ratio) of Indian banks, which had reached a worrying level of 11.8% in the year 2017, came down to a historic low. 2.1% But it has arrived.
The biggest achievement of IBC is not just the recoveries made within the court, but the psychological change in the behavior of defaulting promoters. Before 2016, defaulting promoters would keep cases pending in courts for years and retain control over the company. IBC invoked Section 29A to ban defaulter promoters from bidding in the auction of their own company.
The result was that due to the fear of losing ownership of the company, the debtors were forced to repay the dues to the banks even before the insolvency process began. Even before the application is accepted in the National Company Law Tribunal (NCLT). Nearly ₹14 lakh crore in over 30,000 cases The claims were settled. According to a study by IIM Bangalore, the average time outstanding for default accounts has come down from 344 days to just 30 to 87 days.
Despite great successes, the time-bound resolution, which was considered the backbone of the IBC, has today become the weakest link of this law. As per law, any Corporate Insolvency Resolution Process (CIRP) is subject to maximum 330 days (including the period of litigation) should be completed within.
According to the latest report of rating agency ICRA, the average resolution time in NCLT will increase by 2026. 744 days Which is more than double the legal limit. More than 78% of the cases currently pending in NCLT have crossed the time limit of 270 days.
Following are the main reasons for this excessive delay:
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Severe shortage of judges and judicial capacity: The posts of judges and technical members are lying vacant for a long time in 16 benches of NCLT across the country. Due to the limited number of judges compared to the caseload, cases take months to get to the first hearing (admission).
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Litigation Bottlenecks: Unsuccessful bidders, operational creditors and promoters flood the NCLT, NCLAT and the Supreme Court with petitions to stop the resolution plan.
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Asset Value Erosion: The longer the court delay continues, the more the value of plant, machinery and ongoing business declines, ultimately leading to huge financial losses for the banks.
The prolonged legal tussle has had a direct impact on the recovery rates of banks. While the recovery rate of banks was 46% in the financial year 2024-25, in the financial year 2025-26 it fell to only 23% That is, the recovery rate almost halved in a single year.
This means that banks receive, on an average, Haircut (loss) of 68% to 77% The haircut is being tolerated, and in some quarters has touched as high as 80%. The recovery rate has been limited to only around 24% due to delays, especially in mega default cases larger than ₹1,000 crore.
Additionally, out of the total 7,102 cases closed 3,003 companies (about 42%) went into liquidation. Only recovery of banks in liquidation 4% Which proves that if the process is delayed then it becomes impossible to save the company.
Passed by Parliament to resolve NCLT deadlock and declining recovery rates Seventh IBC Amendment Has been implemented. The following major changes are being made under this amendment:
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Compulsory admission in due time: The rules for admitting a case within 14 days of proving a default to NCLT have been made more binding.
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Digital Bench and Special Tribunal: Formation of special benches for real estate and large infrastructure projects, so that common homebuyers and complex projects do not get embroiled in common litigations.
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Simplification of Pre-packaged Insolvency (PPIRP): Time-saving pre-packed systems are being made more flexible for MSMEs and small industries.
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Ban on unnecessary appeals: After the resolution plan is approved, strict provisions have been added to limit unnecessary appeals by promoters.
10 years of IBC have proved that this law has been very successful in ending the default culture of India. However, its success in the next decade will depend on how the government restores the dignity of the 330-day deadline by appointing adequate judges to the NCLT.