Bailing Businesses, Boosting Banks: The Evolution of Insolvency and Bankruptcy Law in India

The Insolvency and Bankruptcy Code (IBC), introduced in 2016, marked a transformative shift in India's insolvency resolution framework.Designed to replace the fragmented and inefficient pre-existing laws, the IBC aims to facilitate a structured, time-bound process for resolving distressed assets while fostering financial stability and improving credit availability.This paper explores the historical evolution of insolvency regulations in India, the significant impact of the IBC on businesses and creditors, and the persistent challenges that hinder its effectiveness.While the implementation of the IBC has led to notable improvements-such as minimizing delays in resolution, enhancing recovery rates for creditors, and increasing investor confidence-certain structural and operational inefficiencies remain.Industry-specific insolvency challenges, the absence of a robust cross-border insolvency mechanism, and complexities in group insolvency proceedings continue to pose hurdles to its success.Through an in-depth analysis, this research highlights key areas that require reform and provides strategic recommendations to strengthen the existing framework.By addressing these gaps, the IBC can evolve into a more resilient and efficient system, further contributing to India's economic growth and financial discipline.