The Lok Sabha on Monday cleared the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, as finance and corporate affairs minister Nirmala Sitharaman highlighted the law’s role in reshaping the country’s banking landscape.

Speaking in the House, Sitharaman said that the Bill, introduced a decade back in 2016, has been instrumental in improving the health of the banking sector, particularly through the recovery of non-performing assets.

She further stressed that more than half of such stressed assets have been resolved under the framework. The FM stated that the resolution process has also had a wider impact on companies, noting that firms coming out of insolvency have shown improved performance along with stronger corporate governance practices.The amendment Bill, which contains 12 proposed changes, was taken up after being examined by a Select Committee that submitted its report in December 2025. The legislation had originally been introduced in the Lok Sabha on August 12, 2025.Among the changes, the Bill seeks to streamline the admission of insolvency cases by making it mandatory for applications to be admitted within 14 days once a default is established. According to Sitharaman, prolonged litigation has been a key factor behind delays in the resolution process, and the amendments aim to address this by introducing penalties to curb misuse of the system.With this Bill, the IBC has now undergone seven amendments since it first came into force.