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A parliamentary standing committee has advised the government to set up special fast-track courts and strengthen the National Company Law Tribunal (NCLT) structure to reduce the rising backlog of insolvency cases. With nearly 30,600 matters pending and the average resolution period stretching to 713 days, the committee believes additional benches and procedural changes are needed. It noted that quicker resolutions could help creditors recover INR 3-5 lakh crore by preventing value loss in stressed assets. The committee also proposed changes for homebuyers, SMEs, cross-border cases and the overall IBC process.
The parliamentary standing committee on finance recently submitted a detailed report recommending a series of measures to improve India's insolvency framework. The committee said the growing backlog of cases requires immediate intervention, and asked the government to introduce temporary fast-track courts and reinforce the NCLT's capacity to handle insolvency matters more efficiently. Advertisement
The report highlighted that around 30,600 cases were pending before the NCLT at the end of March 2025. With only 30 benches currently operational, the committee agreed with the insolvency regulator's proposal to add 50 more benches over the next five years. It noted that quicker handling of cases could help creditors recover an estimated INR 3-5 lakh crore by preventing loss of value in stressed assets.
The committee expressed concern that the average time for resolving insolvency cases has increased to 713 days, more than double the 330-day limit set under the Insolvency and Bankruptcy Code (IBC). It stated that delays largely arise from slow admission of cases, procedural shortcomings and frequent appeals.
To discourage unnecessary litigation, the committee suggested placing a mandatory upfront deposit on unsuccessful applicants filing appeals, along with strict penalties for frivolous attempts. It added that the existing system often gets burdened because many parties challenge decisions without strong grounds.
The committee also advised reviewing the waterfall mechanism, which governs how recovered amounts are distributed. It said operational creditors especially SMEs and homebuyers often receive limited protection when financial creditors approve resolution plans. It recommended that the corporate affairs ministry coordinate with the housing ministry and sector regulators so homebuyer concerns can be addressed more directly. The panel also supported easing rules that would allow homebuyers to submit resolution plans in select cases, considering their increasing exposure in stalled real estate projects.
The report further recommended introducing an advance-ruling mechanism under the IBC, similar to the framework used under GST, to help companies and creditors understand the likely treatment of certain issues before entering long proceedings. It also encouraged developing a suitable cross-border insolvency framework aligned with global norms to manage cases involving foreign entities and assets.
The committee observed that many of these concerns could be addressed once the proposed amendments to the IBC, previously referred to a select committee, are implemented. The report aims to guide the next stage of reforms in India's insolvency resolution system.
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