The Institute of Chartered Accountants of India (ICAI) has presented its detailed suggestions to the Parliamentary Select Committee examining the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, which seeks to strengthen and streamline India's insolvency resolution framework.
The Select Committee, chaired by BJP MP Baijayant Panda, is reviewing the proposed amendments introduced in the Lok Sabha on August 12, 2025. The ICAI, representing a large segment of insolvency professionals in the country, has made comprehensive recommendations aimed at improving efficiency, governance, and stakeholder value in insolvency proceedings.
According to sources, the ICAI's submissions focused on practical reforms for better implementation of the Code, highlighting that around 60% of registered insolvency professionals are Chartered Accountants, with over 4,560 professionals currently registered with the Insolvency and Bankruptcy Board of India (IBBI).
Key Reforms Proposed in the Bill
The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 introduces several crucial reforms, including:
- Out-of-court settlement framework to enable the resolution of genuine business failures without formal insolvency proceedings.
- Group and cross-border insolvency frameworks to facilitate coordinated resolution of related entities and international cases.
- Reduced delays in admitting insolvency applications, ensuring a more time-bound process.
- Expanded definition of resolution plans to allow innovative restructuring solutions.
- Decriminalisation of procedural lapses, aligning with the government's broader ease of doing business agenda.
In the Statement of Objects and Reasons, Finance and Corporate Affairs Minister Nirmala Sitharaman stated that the proposed changes aim to "reduce delays, maximise value for all stakeholders, and improve governance under the Code."
ICAI's Role in the Insolvency Ecosystem
Since the enactment of the Insolvency and Bankruptcy Code (IBC) in 2016, ICAI has played a crucial role in capacity building and training of insolvency professionals. The institute regularly engages with policymakers and regulatory bodies such as the IBBI and the Ministry of Corporate Affairs to strengthen the ecosystem for the resolution of stressed assets.
The IBC, which provides a time-bound, market-linked framework for resolving insolvencies, has undergone six amendments so far, the last one being in 2021. The latest round of proposed reforms underlines the government's commitment to improving the efficiency and transparency of India's insolvency regime.
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