India's insolvency reforms may boost recovery rates but fail to fix real estate sector crises, with 30,000 cases pending and low 32% average recoveries.

Proposed changes to India's Insolvency and Bankruptcy Code are expected to improve recovery rates and shorten resolution times, according to ICRA, but fall short of addressing deep-seated issues in the real estate sector, the second-largest source of insolvency cases. While reforms like group insolvency and creditor-initiated proceedings could help complex firms, systemic challenges such as project delays, funding gaps, and regulatory inconsistencies remain unaddressed. Over 30,000 cases were pending before the NCLT as of March 2025, and average recoveries for lenders remain low at 32%.