The Indian government is likely to introduce key amendments to the Insolvency and Bankruptcy Code (IBC) during the upcoming winter session of Parliament, in what could be one of the most significant reforms since the law’s inception in 2016.
According to a Zee Business report, the proposed amendments are currently under review by a Select Committee of Parliament chaired by BJP MP Baijayant Panda. Several industry bodies, legal experts, and stakeholders have already submitted their recommendations to the panel.
A major suggestion before the committee is to revisit and redefine the “blood relation” clause under Section 29A of the IBC, a provision that bars promoters and their close relatives from participating in the resolution process of an insolvent company.
Industry representatives and corporate law experts argue that this clause, though well-intentioned, has become overly restrictive. They believe that relatives who have no financial or managerial involvement in a defaulting company should not be automatically disqualified from bidding for it merely because of family ties.
They propose that the definition of a “related party” should be confined to business or financial linkages, not to personal relationships. A bidder, they say, should be barred only if the source of their investment is directly connected to the promoter’s funds, not because of their blood relation.
If accepted, this amendment could open the doors for larger participation in IBC auctions, encouraging greater competition and faster resolution of stressed assets. With more bidders in the fray, the value realisation for creditors may also improve substantially.
Experts suggest that such a change would not only enhance the success rate of IBC cases but also align the law more closely with the government’s broader goal of improving India‘s ‘Ease of Doing Business’ ranking.
Since its introduction in 2016, the IBC has been amended six times, each revision aimed at streamlining the insolvency process, enhancing transparency, and building investor confidence.
The proposed tweak to Section 29A could mark the next major step in this ongoing reform journey, balancing accountability with fairness in India’s corporate insolvency framework.