THE ROLE OF THE IBBI IN RESOLVING FINANCIAL DISTRESS IN THE INDIAN BANKING SECTOR

AUTHOR- MAYANK SARASWAT, LLM STUDENT AMITY LAW SCHOOL, AMITY UNIVERSITY UTTAR PRADESH

BEST CITATION – MAYANK SARASWAT, THE ROLE OF THE IBBI IN RESOLVING FINANCIAL DISTRESS IN THE INDIAN BANKING SECTOR, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (6) OF 2025, PG. 338-358, APIS – 3920 – 0001 & ISSN – 2583-2344

ABSTRACT

This research paper critically examines the role of the Insolvency and Bankruptcy Board of India (IBBI) in resolving financial distress within the Indian banking sector through the effective implementation of the Insolvency and Bankruptcy Code (IBC), 2016. It highlights how the introduction of the IBC marked a paradigm shift from earlier fragmented and inefficient insolvency frameworks, offering a time-bound, creditor-driven process that addresses the challenges of mounting non-performing assets (NPAs) and sluggish debt recovery. The paper explores the regulatory, supervisory, and developmental functions of the IBBI, emphasizing its contribution to strengthening creditor rights, enhancing transparency, and fostering financial discipline among corporate borrowers. It also assesses the impact of the IBC on improving recovery rates, expediting resolution timelines, and bolstering investor confidence. Furthermore, the study identifies key challenges such as judicial delays, stakeholder conflicts, and concerns of operational creditors, while analyzing the IBBI’s ongoing efforts to refine regulations and adopt international best practices. The research underscores the significance of coordinated institutional efforts, particularly between the IBBI, RBI, SEBI, and NCLT, in ensuring the success of the insolvency resolution framework. Ultimately, the paper argues that the IBBI’s role is central to shaping a dynamic, efficient, and equitable insolvency regime that supports the stability and resilience of the Indian banking sector.