National Company Law Tribunals (NCLTs) around the country will take nearly 10 years to clear the pendency of around 30,600 cases at existing disposal rates, the Economic Survey of India 2025–26 has warned.
The survey flagged serious capacity constraints that threaten to undermine the effectiveness of India’s insolvency framework.
It noted that delays in insolvency proceedings have become a binding institutional constraint, with the average time taken to complete the Corporate Insolvency Resolution Process (CIRP) far exceeding statutory limits prescribed under the Insolvency and Bankruptcy Code, 2016 (IBC).
While the IBC mandates completion of CIRP within 330 days, including extensions, the actual average duration stands at 713 days overall and 853 days for cases closed in FY25, representing a deviation of over 150 per cent from the statutory timeline.
Pin-pointing some of the reasons behind such delayed timelines, the survey says,
"The institutional constraint is present at the level of the courts as well as at the level of the Resolution Professionals (RPs). Only 30 NCLT benches handle cases across IBC and Companies Act jurisdictions, and RPs are also in short number. Of 4,527 registered RPs, only 2,198 (49 per cent) hold active Authorisation for Assignment."
Despite these structural challenges, the survey recorded significant improvements in insolvency outcomes since the enactment of the IBC. As of September 2025, 57 per cent of closed CIRP cases resulted in going-concern rescues. These included 1,300 cases resolved through approved resolution plans, 1,342 through appeal, review or settlement and 1,223 withdrawn under Section 12A of the Code. The remaining 43 per cent culminated in liquidation orders affecting 2,896 companies.
The survey highlighted a sharp improvement in outcomes over time, with the resolution-to-liquidation ratio increasing from 20 per cent in FY18 to 91 per cent in FY25.
In value terms, creditors realised ₹3.99 lakh crore from 1,300 resolved cases. Recoveries amounted to 94 per cent of the fair value of resolved businesses and 170 per cent of the value creditors would have received through liquidation. This data indicates that resolution, where feasible, delivers materially better outcomes for creditors than liquidation.
The survey also cited evidence of improved credit discipline following the IBC’s implementation. An IIM Bangalore study analysing nearly six crore corporate loan filings between 2018 and 2024 found that overdue corporate loan amounts declined from 18 per cent of outstanding credit in 2018 to 9 per cent in 2024. The average time taken for accounts to transition from overdue or default status back to normal classification also reduced during this period.
However, the survey cautioned that prolonged insolvency timelines erode asset value, disrupt operations and weaken stakeholder confidence. It noted that the Pre-Packaged Insolvency Resolution Process has seen only 14 admissions since its introduction in 2021, reflecting procedural complexity, lack of awareness, trust deficits in debtor-led processes and funding constraints for MSMEs.
Looking ahead, the Economic Survey referred to the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, which proposes measures to address procedural delays and introduce a framework for cross-border insolvency. The survey emphasised that the next phase of the IBC must combine process reform with a rapid expansion of institutional capacity.