According to Crisil Ratings, the IBC has directly facilitated the resolution of around ₹12 lakh crore across 1,200 stressed cases, while its deterrent effect has led to out-of-court settlements worth an estimated ₹14 lakh crore in nearly 30,000 cases, even before admission by the National Company Law Tribunal (NCLT).
Despite multiple amendments to improve its effectiveness, concerns persist around extended resolution timelines. As of FY25, the average time taken for resolution stands at 713 days, significantly overshooting the mandated 330-day period.
The introduction of the IBC in 2016 marked a fundamental shift in India’s approach to bad loans, moving from a debtor-in-control to a creditor-in-control model. This approach has proved more effective than earlier mechanisms like the Debt Recovery Tribunal (DRT), Lok Adalats, and the SARFAESI Act, delivering the highest average recovery rate of 30-35%, compared with 22% under SARFAESI, 7% under DRT, and just 3% through Lok Adalats, said the rating agency.
“The IBC has contributed to nearly 50% of the total debt recovery since 2016, with one-fourth of all resolved debt handled through this route,” said Mohit Makhija, Senior Director, Crisil Ratings.
He observed that the deterrent effect of the IBC would continue to make it the preferred route for debt resolution going forward.
Makhija also pointed out that the improved economic viability of infrastructure and manufacturing assets had increased their attractiveness for investors seeking turnaround opportunities under the IBC. Additionally, he highlighted that small- to mid-sized assets, which constituted around 85% of the IBC’s unresolved pipeline, were likely to draw interest from investors with diverse risk appetites.
Notably, around 60% of all resolution approvals under IBC have come in the last three fiscals, though these account for just 40% of the total resolved debt — highlighting a growing focus on smaller, viable distressed assets. These small-to-mid-sized cases (admitted debt of less than Rs.500 crore), which form nearly 85% of the current IBC pipeline, are expected to continue attracting a wide range of investors.
To improve resolution timelines and reduce case backlogs — nearly 7,000 cases are pending — the Insolvency and Bankruptcy Board of India (IBBI) has undertaken several reforms. These include increasing the number of NCLT benches, allowing online filings by resolution professionals, and enabling partial resolutions of corporate debt.
The IBBI has also identified bottlenecks in specific sectors such as real estate and MSMEs. Amendments are now in place to streamline real estate resolutions, which are often delayed due to land ownership disputes and project-specific complexities. Around 200 real estate cases with ₹70,000 crore in claims have been pending for an average of 2.5 years.
“Adding 15 new judicial members to NCLT is a welcome step and should ease the existing backlog,” said Tanvi Fifadra, Associate Director, Crisil Ratings.
She added that recent amendments aimed at the real estate sector could accelerate the resolution of around 200 cases involving admitted claims of nearly ₹70,000 crore, which had been pending for an average of 2.5 years. However, she also pointed out that the limited progress in resolving MSME debt, with only eight cases settled through the pre-pack framework so far, remained a concern for stakeholders.
As India’s primary legal framework for insolvency resolution, the IBC has evolved significantly. However, its success in achieving time-bound outcomes — a key promise of the Code — will depend on the impact of these recent reforms, it added.