IBC recoveries improved, but long delays and claim haircuts keep creditor losses under scrutiny

India’s Insolvency and Bankruptcy Code has recovered substantial value for creditors, but the record also shows why delay, claim haircuts and the treatment of large defaults remain legitimate accountability questions. A 1 April 2026 Rajya Sabha speech by AAP MP Sanjay Singh is useful as a political entry point into that debate, but its strongest allegations go beyond what the available evidence establishes.

What the parliamentary exchange shows

During debate on the Insolvency and Bankruptcy Code (Amendment) Bill, 2026, Singh attacked the government’s insolvency and bad-loan record. The official Rajya Sabha synopsis records him alleging that large defaulters and capitalists received disproportionate relief, describing the system as a form of “legalisation of bank loot”, referring to economic offenders including Vijay Mallya, and arguing that lengthy National Company Law Tribunal proceedings undermine the promise of time-bound resolution.

Those statements are political allegations, not findings by Parliament or IndiaFiles. The same debate also contained a sharply different assessment from government-side speakers, who argued that recovery under the IBC had improved relative to the pre-IBC regime and that comparisons based only on admitted claims can obscure the value of distressed assets at the point of resolution.

The core issue: recovery value and delay must be read together

Official Ministry of Corporate Affairs data published in May 2026 say that, as of March 2026, 1,419 cases had produced resolution plans and creditors had realised more than ₹4 lakh crore. The ministry reported realisations equivalent to about 95% of fair value and 167% of liquidation value. It also cited Reserve Bank of India data showing that the IBC accounted for about 52.4% of scheduled commercial banks’ recoveries through major recovery channels in 2024-25, with the IBC recovery rate rising to 36.6% that year.

Those figures do not mean creditors recovered every rupee originally claimed. Haircuts against admitted claims can still be large because an insolvent company may already be worth far less than its outstanding debt. The economically relevant questions are therefore not captured by a single percentage: how much value remained when the process began, how much was recovered relative to fair and liquidation value, how long the process took, and whether delay further eroded the business.

Time remains a material weakness. The Code was designed around time-bound resolution, while the government itself says average resolution now takes about two years—far shorter than the six-to-eight-year pre-IBC regime, but still well beyond the statutory ideal in many cases. The 2026 amendment was presented as an attempt to reduce delays, strengthen creditor oversight and make procedures more predictable.

Write-offs are not the same as loan waivers

Singh’s broader criticism also sits within a public debate that often treats bank write-offs as if the borrower’s debt were forgiven. That is not what a write-off means. Finance Ministry data reported to Parliament in 2026 state that a written-off borrower remains liable and banks can continue recovery action. The same data also show that write-offs are not confined to large industrial borrowers: retail loans were the largest category of bank write-offs in 2024-25.

This distinction does not make write-offs irrelevant. Large write-offs can still reflect earlier credit losses and weak recovery, and citizens have a legitimate interest in how public-sector banks manage them. But describing every write-off as a waiver or transfer to a favoured industrialist overstates what the accounting action proves.

What remains unproven

The reviewed evidence supports scrutiny of slow insolvency proceedings, creditor losses and the governance of large default cases. It does not establish Singh’s stronger claims that the IBC system itself is a corruption mechanism, that political pressure caused particular haircuts, or that the government deliberately enabled named economic offenders to flee. Those claims require transaction-specific, investigative or judicial evidence.

The distinction matters because the IBC is neither a simple success story nor evidence by itself of organised “bank loot”. It has produced recoveries materially above liquidation value and improved stressed-asset resolution compared with the earlier regime, while persistent delays and losses against admitted claims remain real weaknesses. The public-interest test for the 2026 reforms is whether they can reduce those delays and preserve more value without weakening transparency, creditor fairness or safeguards against misuse.

Later institutional response

In September 2026, the Insolvency and Bankruptcy Board of India issued a circular requiring insolvency professionals to conduct due diligence regarding possible misuse of the IBC framework. That step does not validate Singh’s corruption allegations, but it shows that abuse-prevention remains an active regulatory concern alongside speed and recovery.