Desperate Need for IBC Overhaul

The Insolvency and Bankruptcy Code, 2016 ranks among India’s most consequential economic law reforms. Conceived not as a mere recovery tool but as a behavioural intervention, it replaced regulatory forbearance and borrower dominance with a creditor controlled, time bound insolvency framework aimed at rewiring credit market incentives. The Code’s early success lay in its severity: the credible threat of loss of control transformed borrower behaviour, strengthened repayment discipline, and restored lender confidence. As the regime has matured, however, operational slippages, rising litigation, delayed entry, institutional congestion, valuation opacity, and uneven outcomes, have diluted this discipline. The challenge today is not whether the IBC should endure, but how it must evolve. What is required is not abandonment, but recalibration an IBC 2.0.