The Insolvency and Bankruptcy Code (IBC) has played a crucial role in resolving financial distress in India, with significant progress made since its introduction in 2016.
Union Minister of State for Corporate Affairs, Harsh Malhotra, informed the Lok Sabha that out of 40,943 applications filed under IBC, 28,818 cases were resolved even before reaching the admission stage.
These resolved cases involved an estimated amount of Rs 10 lakh crore, showcasing the effectiveness of the insolvency framework in addressing financial disputes at an early stage.
The IBC has not only streamlined insolvency resolutions but has also significantly improved India's global ranking in this area. In the World Bank's Doing Business Report (DBR) 2019, India jumped 56 places to reach the 52nd position in resolving insolvency, compared to its 108th rank in 2018.
This improvement reflects the positive impact of reforms that have enhanced the ease of doing business and increased investor confidence in India's financial and corporate governance framework.
A crucial aspect of the IBC reforms includes protecting homebuyers. The minister highlighted that if a real estate developer or a consumer approaches the National Company Law Tribunal (NCLT), a quasi-judicial body handling insolvency matters, the resolution process is carried out on a tower-to-tower basis.
This ensures that homebuyers retain their right to possession, even during ongoing proceedings, preventing unnecessary delays in project completions.
Despite the progress made under the IBC, a considerable number of cases remain pending before the NCLT. As of December 31, 2024, there were 8,133 cases pending under the Companies Act and 12,351 cases under the IBC.
The minister pointed out several reasons for this backlog, including the complexity of cases, involvement of multiple stakeholders, nature of evidence, and adjournments caused by legal interventions. Additionally, some cases face delays due to stays imposed by higher courts.
To address the issue of pending cases, the government has introduced various measures to facilitate faster resolution. These include the implementation of e-courts and hybrid court projects, regular training programs for NCLT members, improved infrastructure, and filling up of judicial vacancies.
The government remains committed to ensuring that insolvency resolutions are carried out in a time-bound manner to maintain financial stability and promote business growth.
As part of the broader effort to enhance ease of doing business, India has undertaken several initiatives to create a more conducive environment for businesses.
The Doing Business Report (DBR) 2019, published by the World Bank, was a key indicator of India’s progress. However, the World Bank discontinued this report in September 2021, with the last edition released in October 2019.
In response, the World Bank has introduced the B-Ready (Business Ready) project, a new initiative aimed at assessing various aspects of a business lifecycle, such as starting a business, obtaining construction permits, and resolving insolvency.
The first B-Ready report was launched on October 3, 2024, and India is expected to be covered in the third phase of this assessment. The findings related to India are anticipated to be published in September 2026, providing a fresh perspective on the country’s business environment and regulatory framework.
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