IBC played a key role in helping banks recover from NPA crisis created by UPA government: FM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman credited the Insolvency and Bankruptcy Code (IBC), introduced by PM Narendra Modi's government in 2016, for aiding banks in recovering from the NPA crisis inherited from the Congress-led UPA government. She criticized the previous administration for neglecting corporate distress and creating a disjointed legislative framework, exacerbating issues. \r

Sitharaman highlighted the IBC's role in streamlining insolvency resolutions, reducing resolution times significantly compared to global standards. According to her, the IBC has restored trust and transparency in the financial system, leading to substantial recoveries and a decline in the GNPA and NNPA ratios. \r

Expert groups, including the Raghuram Rajan-led Committee on Financial Sector Reforms, have underscored the necessity for a modern corporate insolvency regime due to inefficiencies and delays in asset reallocation and business closures.