The Insolvency And Bankruptcy Code 2016 And Indian Banking Stability: A Systematic Review Of Impacts, Outcomes, And Unresolved Paradoxes
- YourLawArticle
- Jul 31, 2025
- 1 min read
Written by: Prof. Shrirang Anil Deshpande, Assistant Professor, The Karnataka Law Society’s Institute of Management Education and Research, Hindwadi, Belagavi
&
Dr Arif Shaikh, Director and Professor, The Karnataka Law Society’s Institute of Management Education and Research, Hindwadi, Belagavi
Abstract
The Insolvency and Bankruptcy Code (IBC) 2016 was enacted as a transformative legislation to resolve insolvency efficiently and enhance creditor recovery, thereby promoting banking sector stability in India. This systematic review synthesises empirical and theoretical literature from 2016 to 2023 to assess the impact of the IBC on banking stability, recovery outcomes, and persistent challenges. Following the PRISMA framework, 68 studies from Google Scholar were analysed. Findings indicate that the IBC has improved recovery rates and reduced non-performing assets (NPAs), yet operational bottlenecks, litigation delays, and high haircuts undermine its efficacy. The review identifies key paradoxes: trade-offs between resolution speed and value, as well as between creditor rights and the equitable treatment of stakeholders. The study concludes with policy recommendations for strengthening the IBC ecosystem to reinforce banking stability.
Keywords: Insolvency and Bankruptcy Code 2016, Indian banking, NPA resolution, financial stability, systematic review, creditor recovery, NCLT
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