Economics • Indian EconomyEasy
What is the primary purpose of the 'Insolvency and Bankruptcy Code (IBC), 2016' in India?
A. To bail out failing commercial banks using direct budgetary allocations from the central government.
B. To consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms, and individuals in a time-bound manner.✓ Correct Answer
C. To nationalize private non-banking financial companies facing severe liquidity crunches.
D. To provide legal immunity to industrialists facing international arbitration claims.
💡 Solution & Explanation
The primary objective of the Insolvency and Bankruptcy Code enacted in 2016 is to consolidate and amend laws relating to the time-bound reorganization and insolvency resolution of corporate bodies, partnership firms, and individuals to maximize asset value. It replaced a fragmented legal framework with a single unified platform overseen by specialized tribunals. This reform has significantly improved India's ease of doing business rankings and resolution timelines.
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