Alerts & Updates 4th Feb 2026
The Economic Survey 2025 reflects a banking system that has stabilised after years of stress, supported by better asset quality, stronger capital positions and improved profitability. Reforms such as the Insolvency and Bankruptcy Code, 2016 have helped restore credit discipline and address legacy NPAs. At the same time, the data emerging from insolvency processes reveals persistent concerns, delays, uneven recoveries, limited revival of enterprises and significant value erosion, particularly in liquidation cases.
This update examines these trends together, linking banking sector performance with insolvency outcomes and their impact on economic activity. It highlights how IBC, while effective as an enforcement tool, is increasingly used as a first resort, often at the cost of timely restructuring and value preservation, with MSMEs remaining the most exposed. The discussion points to the need for stronger pre-insolvency and market-based resolution frameworks that can complement IBC and support sustainable growth and entrepreneurship.
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