What is the common examiner trap about Economy in UPSC exams?

They may ask about the 'primary objective' of IBC, tempting you to choose 'debt recovery for banks', but the correct answer is 'resolution of viable businesses and preserving enterprise value' as clarified by the Finance Minister.

What should UPSC aspirants remember about Economy for Prelims?

1. Target this Data: Creditor recovery exceeding 34% of claims as of Dec 2025. 2. Target this Nodal Body: The Select Committee on the IBC Bill was chaired by Baijayant Panda. 3. Target this Legal Point: Introduction of Creditor-initiated Insolvency Resolution Process (CIIRP) requiring 51% approval.

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Parliament Passes IBC (Amendment) Bill, 2026 to Introduce CIIRP, Group Insolvency & Cross-border Framework

Q: Which parliamentary committee examined the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, and submitted recommendations?

Select Committee, The article states the Bill was referred to a Select Committee on the same day it was introduced in Lok Sabha (August 12, 2025). This committee, chaired by Baijayant Panda, submitted its report with 11 recommendations.

Q: Consider the following statements regarding the Insolvency and Bankruptcy Code (Amendment) Bill, 2026: 1. It introduces a Creditor-initiated Insolvency Resolution Process (CIIRP) which requires approval from at least 51% of financial creditors. 2. It mandates that the National Company Law Tribunal (NCLT) must admit an application for insolvency within 14 days of filing, without exception. 3. It proposes to replace criminal penalties with civil penalties for offences such as contravention of a moratorium. Which of the statements given above is/are correct?

Both 1 and 3, Statement 1 is correct as per the article: CIIRP requires at least 51% of financial creditors to agree. Statement 2 is incorrect; the amendment mandates admission upon proven default but does not re-state or change the existing 14-day timeline for NCLT's decision. The article highlights that the 14-day rule exists but is often delayed. Statement 3 is correct as the Select Committee recommended replacing criminal penalties with civil penalties for certain offences, which was incorporated.

Q: As of December 2025, what was the approximate amount recovered by creditors through resolutions under the Insolvency and Bankruptcy Code (IBC)?

₹4.11 lakh crore, The article provides the specific data point: 'As of December 2025, IBC has facilitated the resolution of 1,376 companies, helping creditors to recover 4.11 lakh crore.' The other options are close distractors.

Q: What is a key rationale, as per the Select Committee, for disallowing a Resolution Professional (RP) from becoming the liquidator of the same corporate debtor?

To prevent a potential conflict of interest where the RP might favour liquidation to secure higher fees., The article explicitly states the committee's observation: the RP may have a 'perverse incentive' to favour liquidation over resolution because a liquidator's remuneration is often a percentage of the liquidation estate, unlike the RP's fixed salary. This is a direct conflict of interest.

Economy PolityCORE

Target:UPSC GS-IIIMPSCBankingSSC GATeachingPrelims HighMains HighStatic GK Link

03 Apr 2026

~2 min

Source: Indian Express

Key Data:1,376 companies resolved₹4.11 lakh crore recovered>34% recovery rate51% creditor threshold for CIIRP

Bodies:ParliamentMinistry of Corporate AffairsNCLTNCLATIBBISelect Committee

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~2 min · Quick mode

What This Article Covers

1.The Insolvency and Bankruptcy Code (Amendment) Bill, 2026 was passed by Parliament, marking the seventh amendment to the IBC since 2016.

2.Key changes include the Creditor-initiated Insolvency Resolution Process (CIIRP) requiring 51% creditor approval, mandatory NCLT admission upon proven default, and frameworks for group and cross-border insolvency.

3.A Select Committee chaired by Baijayant Panda recommended 11 changes, all incorporated, including replacing criminal penalties with civil penalties for certain offences and lowering the voting threshold for pre-packaged insolvency.

The Big Picture

Prelims · HighMains · High

The Parliament has passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2026, incorporating 11 recommendations from a Select Committee. This major reform aims to plug delays in the insolvency process by introducing a creditor-led out-of-court mechanism (CIIRP), a framework for group and cross-border insolvency, and stricter timelines for tribunals.

Exam Lens

Quick Exam Facts From News

Bill PassedInsolvency and Bankruptcy Code (Amendment) Bill, 2026

Select Committee ChairBaijayant Panda (BJP MP)

CIIRP Approval Threshold51% of financial creditors

Total Companies Resolved (Dec 2025)1,376

Amount Recovered by Creditors₹4.11 lakh crore

Recovery Rate for Financial Creditors>34% of claims

1-Minute Revision

›Bill Passed: Insolvency and Bankruptcy Code (Amendment) Bill, 2026
›Select Committee Chair: Baijayant Panda (BJP MP)
›Target this Data: Creditor recovery exceeding 34% of claims as of Dec 2025.
›Target this Nodal Body: The Select Committee on the IBC Bill was chaired by Baijayant Panda.
›Target this Legal Point: Introduction of Creditor-initiated Insolvency Resolution Process (CIIRP) requiring 51% approval.

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News Snapshot

⚖️

Mandatory Admission by NCLT

The amendment mandates the NCLT to admit an insolvency application once a default is proven, removing other grounds for rejection to tackle initial delays.

🤝

Creditor-led Out-of-Court Process (CIIRP)

A new Creditor-initiated Insolvency Resolution Process (CIIRP) allows specified financial creditors (with 51% approval) to initiate an out-of-court resolution, bypassing NCLT bottlenecks.

🌐

Cross-border & Group Insolvency

The Bill introduces formal frameworks for group insolvency and cross-border insolvency, aligning India's processes with international best practices to boost investor confidence.

Detailed Analysis & Strategic Depth

Context / Background

The IBC, enacted in 2016, has been amended six times prior to address evolving challenges. Despite improving credit discipline, it faced criticism over delays, case backlogs, and low recovery rates for banks. The 2026 amendments are a structural response to these persistent issues, based on a 577-page Select Committee report.

Core Analysis & Implications

The amendment shifts the NCLT's role from discretionary to mandatory admission upon proven default, directly attacking the first-stage bottleneck. The CIIRP creates a parallel, faster track for creditors, potentially reducing the burden on tribunals. Introducing group and cross-border insolvency frameworks is crucial for complex corporate structures and global investments, enhancing India's ease of doing business. Replacing criminal penalties with civil penalties for certain offences (like moratorium breach) acknowledges that delays may not always be malafide, reducing litigation fear.

Future Outlook / Way Forward

The success hinges on effective implementation by NCLT, NCLAT, and the Insolvency and Bankruptcy Board of India (IBBI). The three-month timeline for NCLAT appeals must be strictly enforced. The cross-border rules need clear operational guidelines for recognition of foreign proceedings. Continuous monitoring of recovery rates and resolution timelines will be essential to assess the real impact of these amendments.

Philosophical Shift: Resolution vs. Recovery

Finance Minister Nirmala Sitharaman clarified that the IBC is a resolution framework, not a debt recovery tool. This underscores the law's objective to rescue viable businesses and preserve enterprise value, even if recovery percentages for banks are not maximized in every case.

Key Facts at a Glance

Bill PassedInsolvency and Bankruptcy Code (Amendment) Bill, 2026

Select Committee ChairBaijayant Panda (BJP MP)

CIIRP Approval Threshold51% of financial creditors

Total Companies Resolved (Dec 2025)1,376

Amount Recovered by Creditors₹4.11 lakh crore

Recovery Rate for Financial Creditors>34% of claims

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Practice exam-style questions based on this article.

Q1Static LinkageEasyUPSC, SSC, State PSC

Which parliamentary committee examined the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, and submitted recommendations?

Q2Statement-basedHardUPSC, Banking

Consider the following statements regarding the Insolvency and Bankruptcy Code (Amendment) Bill, 2026:

1. It introduces a Creditor-initiated Insolvency Resolution Process (CIIRP) which requires approval from at least 51% of financial creditors.

2. It mandates that the National Company Law Tribunal (NCLT) must admit an application for insolvency within 14 days of filing, without exception.

3. It proposes to replace criminal penalties with civil penalties for offences such as contravention of a moratorium.

Which of the statements given above is/are correct?

Q3Data-centricMediumUPSC, Banking, SSC

As of December 2025, what was the approximate amount recovered by creditors through resolutions under the Insolvency and Bankruptcy Code (IBC)?

Q4Application/ImpactMediumUPSC, Banking

What is a key rationale, as per the Select Committee, for disallowing a Resolution Professional (RP) from becoming the liquidator of the same corporate debtor?

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Parliament Passes IBC (Amendment) Bill, 2026 to Introduce CIIRP, Group Insolvency & Cross-border Framework

Exam Lens

Quick Exam Facts From News

1-Minute Revision

News Snapshot

Mandatory Admission by NCLT

Creditor-led Out-of-Court Process (CIIRP)

Cross-border & Group Insolvency

Detailed Analysis & Strategic Depth

Context / Background

Core Analysis & Implications

Future Outlook / Way Forward

Philosophical Shift: Resolution vs. Recovery

Prelims Flashpoints

Key Facts at a Glance