India's banking sector has seen a significant improvement in asset quality due to IBC: DFS Secy

India's banking sector has seen a significant improvement in asset quality due to IBC: DFS Secy

India's banking sector has seen a significant improvement in asset quality due to Insolvency and Bankruptcy Code, said Department of Financial Services Secretary M Nagaraju.

"India's banking sector has seen a significant improvement in asset quality. IBC has forced debtors to come forward and pay dues. That's a behavioural change. In Q2, the public sector banks have done well (in terms of profitability)," he said at the 9th Annual Day of the Insolvency and Bankruptcy Board of India.

Since 2016, 8,608 corporate insolvency resolution process (CIRP) cases have been initiated, of which over 6,900 have been concluded

The fear of losing control of firm on inhiation of CIRP is nudging debtors to settle default with creditors, he said.

"IBC has given many distressed businesses a genuine path to revival. Despite capacity constraints, IBC is working well. In the April-June quarter of FY26, 61 resolution plans were approved, and creditors realised 29% of the admitted claims," Nagaraju added.

Nagaraju, however, said timelines in IBC remain the most pressing challenge. The law mandates CIRP to conclude in 330 days, but multiple stakeholders and processes delay the resolution, he said.

Once Committee of Creditors approve a resolution plan, bank representatives must attend NCLT proceedings during CIRP , to ensure delays are avoided, added Nagaraju.