New Delhi, March 25 Members of the opposition in the Lok Sabha criticized the Insolvency and Bankruptcy Code (IBC) on Wednesday, arguing that it has failed to deliver timely resolutions due to the limited capacity of the tribunals, which are overburdened with cases. The BJP defended the 2016 law and accused the opposition of clinging to "license raj" mindsets from the Nehruvian and Indira Gandhi eras.
Participating in the debate on the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, which has been brought afresh based on the recommendations of a select committee of the lower house, opposition members also claimed that the code has become a tool to "rip off" the assets of companies.
In response to the criticism of the IBC, BJP MP Yaduveer Wadiyar said that their viewpoint remains "stuck in that license raj era from Nehruvian time and the times of Indira Gandhi," accusing them of opposing "a very important reform...just for the sake of opposition."
He said that the policies enforced during the UPA era weakened the country's banking system.
"From 2014 onwards, our government has unclogged the system and undone much of the regressive policy that was done during that era, and the 2016 IBC was one such landmark policy that became the cornerstone of the Modi government's progressive outlook, balancing regulation for a more free outlook and ease of doing business especially in our finance and banking sector," Wadiyar said.
"I commend the government... for this proactive reboot of our nation's insolvency framework. It has shifted India from an adapter's paradise to a creditor-led system of accountability," he said.
Senior BJP MP Anurag Thakur said that the IBC has led to the recovery of over Rs 4 lakh crore in the last decade through the resolution of bankrupt companies. He noted that the IBC is not a recovery mechanism but a revival and resurrection of the company.
TMC's Saugata Roy claimed that both the judiciary and the executive have undermined insolvency resolution in the country. He said that the National Company Law Tribunal (NCLT) has "limited capacity," leading to delayed resolution of cases. He also alleged that the law on fugitive offenders was weak, thus, failing to serve its purpose.
D Prasad Rao of the TDP flagged delayed resolutions but said the amendments in the insolvency and bankruptcy law would ensure faster settlements.
K Veeraswamy of the DMK said that the insolvency code has become a tool to "rip" the assets of companies by finding flaws in the insolvency ecosystem. He also flagged delays by tribunals in settling disputes.
The government has been trying to resolve several challenges, including timelines of resolutions and liquidations, resulting in value deterioration, low realisations to creditors and capacity constraints at NCLT.
The select committee in its report has sought to address some of these key challenges relating to delays in resolution and liquidation, and low recovery rates.
The discussion concluded on Wednesday, and the government is likely to respond on Friday.