Section 195 of the Insolvency and Bankruptcy Code, 2016: Power to Designate Financial Sector Regulator
Section 195 is a transitional provision that empowered the Central Government, until the Insolvency and Bankruptcy Board of India was established, to designate a financial sector regulator to exercise the powers and functions of the Board under the Code.
Section 195 - Statutory Provision
Until the Board is established, the Central Government may by notification, designate any financial sector regulator to exercise the powers and functions of the Board under this Code.
Meaning and Scope of Section 195
The provision was designed to prevent a regulatory vacuum during the period before establishment of the Insolvency and Bankruptcy Board of India. It authorised the Central Government to make a designation by notification so that a financial sector regulator could temporarily exercise the Board's statutory powers and functions.
Meaning of Financial Sector Regulator
Section 3(18) of the Insolvency and Bankruptcy Code defines "financial sector regulator" to mean an authority or body constituted under any law for the time being in force to regulate services or transactions of the financial sector. The definition includes the Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority of India, the Pension Fund Regulatory Authority and such other regulatory authorities as may be notified by the Central Government.
Designation by Central Government Notification
Section 195 requires the designation to be made by the Central Government by notification. The designated regulator could exercise the powers and functions assigned to the Board under the Code during the transitional period contemplated by the section.
Transitional Character of the Provision
The words "Until the Board is established" make Section 195 transitional in character. Section 188 provides for establishment of the Insolvency and Bankruptcy Board of India by Central Government notification. The IBBI was established on 1 October 2016, so the contingency addressed by Section 195 belongs to the Code's initial institutional transition.
Relationship with Section 244
Section 244 contains the Code's transitional provisions. It provides that until the Board is constituted or a financial sector regulator is designated under Section 195, as the case may be, the powers and functions of the Board or such designated regulator, including the power to make regulations, are to be exercised by the Central Government.
Section 195 at a Glance
| Element | Legal Position |
|---|---|
| Nature | Transitional provision. |
| Authority making designation | Central Government. |
| Method | By notification. |
| Possible designee | Any financial sector regulator within the meaning of the Code. |
| Functions exercised | Powers and functions of the Board under the Code. |
| Duration | Until the Board is established. |
Related IBC Provisions
Section 3(18): Defines "financial sector regulator".
Section 188: Provides for establishment and incorporation of the Insolvency and Bankruptcy Board of India.
Section 189: Provides for constitution of the Board.
Section 196: Sets out the powers and functions of the Board.
Section 244: Contains transitional provisions concerning exercise of the Board's powers before the institutional arrangements contemplated by the Code were in place.
Official Legal Resources
India Code - Insolvency and Bankruptcy Code, 2016