New Delhi, May 12 (IANS): Parliament on Wednesday passed the Insolvency and Bankruptcy Code 2016, a key reform that will make it much easier to do business in India and help the recovery of bad loans for banks.

The bill, passed by the Lok Sabha last week, seeks to overhaul the laws regulating insolvency amid a surge in bad loans.

It also seeks to amend the laws, including the Companies Act, to become an overarching legislation.

Officials and experts say the passage of the legislation before May 31 can help India improve its rankings in the World Bank's "ease of doing business index".

At present, on the parameter of resolving insolvency, India is ranked 136th among 189 countries. The new code seeks to replace the existing century-old bankruptcy laws and provide a time-bound process for resolving insolvency issues.

It will cover individuals, companies, limited liability partnerships and partnership firms.

"Bankruptcy code creates Framework for timely revival or resolution of companies in distress. Will help all stakeholders," Economic Affairs Secretary Shaktikanta Das said in a tweet.

"It's a big day for economic reforms in India. The country moves ahead towards higher growth," he said in another tweet.