Revised IBC amendment bill expected to be taken up in Parliament after recess: Nirmala Sitharaman

The proposed IBC 2.0 amendments seek to address these gaps by streamlining procedures.

• Government to table revised IBC amendment bill after Budget session recess
• Committee suggests decriminalizing minor insolvency law violations
• IBC 2.0 aims to streamline procedures and enforce stricter resolution timelines

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The government is likely to bring in the revised Insolvency and Bankruptcy Code (IBC) amendment bill when Parliament re-assembles for Budget session after recess, finance minister Nirmala Sitharaman said on February 2, signalling progress on the long-pending overhaul of India’s insolvency framework.

“The select committee has submitted its report, and it is expected to be taken up in Parliament in the latter half of the current session after the House reconvenes following the recess,” Sitharaman told the media during a post-Budget briefing.

The remarks indicate that the government is preparing to move ahead with the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, after factoring in the recommendations of the parliamentary panel.

The first phase of the budget session ends February 13 and Parliament will reconvene from March 9 to April 2.

Select committee report finalised

The bill was referred to a parliamentary select committee last year for closer scrutiny amid concerns over delays, litigation and implementation challenges under the existing insolvency law.

The committee has submitted its report, clearing the way for the government to introduce a revised version.

The bill was sent to the select committee, chaired by senior BJP leader Baijayant Panda, after several members sought a more detailed examination.

What did the panel recommend?

Sources have told Moneycontrol that one of the key recommendations of the select committee is to reduce criminal liability for certain procedural or technical violations under the insolvency law.

The panel is learnt to have suggested that minor and technical lapses be de-criminalised and dealt with through civil penalties, a move aimed at reducing litigation and easing compliance concerns for resolution applicants and insolvency professionals.

The committee is also understood to have focused sharply on timeliness in insolvency proceedings.

According to people familiar with the matter, it has proposed tighter and more explicit timelines across various stages of the resolution process, including at the appellate level, to prevent prolonged litigation that erodes asset value and delays recoveries for lenders.

Why IBC 2.0 matters?

Enacted in 2016, the Insolvency and Bankruptcy Code was designed to provide a time-bound mechanism for resolving corporate stress and improving recovery rates for banks and creditors.

While the law has transformed India’s approach to insolvency and strengthened creditor discipline, repeated delays, frequent legal challenges and capacity constraints at tribunals have diluted its effectiveness over time.

The IBC 2.0 amendments seek to address these gaps by streamlining procedures, improving certainty for bidders and reinforcing timelines to ensure faster resolution of stressed assets. The changes are also aimed at making the framework more predictable for investors.