The Insolvency and Bankruptcy Code (IBC) has been a main and very crucial factor in improving the health of the country’s banking sector, including recovery of non-performing assets, Union Minister for Finance and Corporate Affairs Nirmala Sitharaman said in the Lok Sabha on Monday.
“Companies have been doing well and their corporate governance practices have also improved after coming out of the insolvency resolution process,” she said.
While replying to the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, the minister said, “The IBC has been a main and very crucial factor in improving the health of the country’s banking sector. More than half of the NPAs (Non-Performing Assets) have been recovered by the banks through the resolution process.”
“IBC has proven to be a highly effective channel for recovering NPAs for Scheduled Commercial Banks (SCBs). SCBs have recovered a total of Rs 1,04,099 crore through various channels. Out of this, the IBC channel alone contributed a significant Rs 54,528 crore, accounting for 52.3%,” she said.
“This Bill replaces the underutilised fast-track process (essentially CIRP with reduced timeline for small companies) with a new creditor-initiated insolvency framework featuring out-of-court initiation, debtor-in-possession and creditor-in-control model where management continues to vest in the existing Board of Directors or partners with safeguards, and defined timelines,” Sitharaman said.
“Additionally, it also introduces an enabling framework for group insolvency and cross-border insolvency to promote investor confidence and aligning domestic practices with international best practices.”
In the Parliament, the Finance Minister also talked about the Fugitive Economic Offenders Act, 2018 saying it was enacted to deter economic offenders from evading Indian law by staying abroad & was applicable to offences involving Rs 100 crore or more.
“Actions taken under the law include confiscation of properties, proceeds of crime, Benami properties, lookout notices through the Bureau of Immigration, prohibition on raising capital & acquiring shares or voting rights,” she said.
“ED investigated 1,105 bank fraud cases under PMLA with attachment of proceeds of crime amounting to Rs 64,920 crore. One hundred and fifty accused have been arrested and 277 Prosecution Complaints filed. Eight accused have been declared Fugitive Economic Offenders under Fugitive Economic Offenders Act (FEOA). Assets worth Rs 15,186 crore were confiscated, of which Rs15,183 crore restituted to Public Sector Banks. 3 accused have been convicted under PMLA. PMC Bank recovered Rs 104 crore with ED’s support. Assets worth Rs 725 crore have been confiscated under the FEOA provisions,” the minister added.
Notably, last year on August 12, the government introduced the Bill in the Lok Sabha to amend the Insolvency and Bankruptcy Code (IBC), proposing a raft of changes, including provisions to reduce the time taken for admission of insolvency resolution applications. The Bill was then referred to a select committee of the Lok Sabha, which submitted its report in December 2025.