Nine years ago, India’s insolvency system was clogged with delays, uncertainty, and weak creditor rights. Defaults often dragged on for years, and liquidation was the norm. The Insolvency and Bankruptcy Code (IBC), enacted in 2016, has since transformed this landscape. It has brought financial discipline to borrowers, legal clarity for creditors and investors, and stability to banks. In the early years, outcomes were heavily skewed toward liquidation.
For every one company resolved, nearly five went into liquidation. Many of these were already defunct, with little value to salvage. Over time, however, the balance shifted. By FY24, the resolution-to-liquidation ratio had improved to 0.61. By FY25, resolutions nearly matched liquidations. This shows India has moved from shutting businesses down to giving them a second life. By March 2025, a total of 1,194 corporate resolution plans had been approved. Creditors realized ₹3.58 lakh crore out of ₹11.39 lakh crore in admitted claims. That equals 31.4 percent recovery of claims, and an impressive 162.8 percent of liquidation value.
In FY25 alone, creditors recovered close to ₹58,600 crore, making it one of the strongest years since the Code came into force. Real money flowing back to creditors proves the IBC is not symbolic—it delivers tangible value. The Code has also reshaped financial culture. Promoters now know that prolonged defaults carry real consequences. Creditors have clear rights, and investors have confidence that rules will be applied consistently. Certainty in law has turned bankruptcies into opportunities, not dead-ends.
The impact is equally visible in the banking system. Gross non-performing assets of public sector banks fell from 9.11% in March 2021, amounting to Rs6.16 lakh crore, to just 2.58% in March 2025, or Rs2.84 lakh crore. For all scheduled commercial banks, NPAs dropped from a peak of 11.18% in 2018 to 2.67% in June 2024. Fewer NPAs mean healthier banks with more capital to lend for growth and infrastructure. Institutional capacity has also risen. The National Company Law Tribunal now has more than 60 judges, compared to fewer than 30 just three years ago.
Over 4,500 registered insolvency professionals are handling cases with greater expertise and accountability. Stronger institutions mean speed, efficiency, and trust in the system. The nine-year journey of the IBC shows how financial discipline and legal clarity can transform an economy. From weak enforcement and endless defaults to real recoveries, stronger banks, and revived companies, the Code has delivered measurable results. IBC has turned default into discipline and that discipline is powering India’s growth story.
(The author is a noted lawyer specialising in NCLT matters)
