Section 204 of the Insolvency and Bankruptcy Code, 2016: Functions of Insolvency Professional Agencies
Section 204 specifies the core statutory functions of an insolvency professional agency. These functions cover admission of members, professional and ethical standards, monitoring, protection of member interests, disciplinary action, grievance redressal and publication of information.
Section 204 - Statutory Provision
An insolvency professional agency shall perform the following functions, namely:-
(a) grant membership to persons who fulfil all requirements set out in its bye-laws on payment of membership fee;
(b) lay down standards of professional conduct for its members;
(c) monitor the performance of its members;
(d) safeguard the rights, privileges and interests of insolvency professionals who are its members;
(e) suspend or cancel the membership of insolvency professionals who are its members on the grounds set out in its bye-laws;
(f) redress the grievances of consumers against insolvency professionals who are its members; and
(g) publish information about its functions, list of its members, performance of its members and such other information as may be specified by regulations.
Meaning and Scope of Section 204
Section 204 places continuing statutory responsibilities on every insolvency professional agency. An agency is not merely a membership body. It forms part of the regulatory architecture of the Code and performs functions relating to entry into membership, professional standards, monitoring, discipline, grievance handling and transparency.
Grant of Membership
Under clause (a), an agency grants membership to persons who satisfy the requirements contained in its bye-laws and pay the applicable membership fee. The bye-laws therefore play a central role in determining the membership framework.
Professional Conduct
Clause (b) requires an insolvency professional agency to lay down standards of professional conduct for its members. This function supports the wider statutory objective of maintaining professional and ethical standards among insolvency professionals.
Monitoring of Members
Clause (c) requires the agency to monitor the performance of its members. Monitoring supports accountability and enables the agency to supervise compliance with the Code, regulations, professional standards and applicable bye-laws.
Safeguarding Member Interests
Clause (d) requires the agency to safeguard the rights, privileges and interests of insolvency professionals who are its members. This function exists alongside the agency's regulatory and disciplinary responsibilities.
Suspension or Cancellation of Membership
Clause (e) authorises the agency to suspend or cancel the membership of an insolvency professional on grounds set out in its bye-laws. The applicable bye-laws and regulatory framework govern the disciplinary process and related safeguards.
Grievance Redressal
Clause (f) requires the agency to redress grievances of consumers against insolvency professionals who are its members. This provides an institutional mechanism for complaints concerning member professionals.
Publication and Transparency
Clause (g) requires publication of information concerning the agency's functions, its list of members, the performance of its members and other information specified by regulations. This statutory disclosure function promotes transparency in the insolvency profession.
Functions Under Section 204 at a Glance
| Clause | Function |
|---|---|
| (a) | Grant membership to eligible persons in accordance with the agency's bye-laws. |
| (b) | Lay down professional conduct standards. |
| (c) | Monitor performance of members. |
| (d) | Safeguard rights, privileges and interests of member insolvency professionals. |
| (e) | Suspend or cancel membership on grounds stated in the bye-laws. |
| (f) | Redress consumer grievances against member insolvency professionals. |
| (g) | Publish prescribed information about the agency and its members. |
Relationship with Model Bye-Laws
Section 205 requires every insolvency professional agency to make bye-laws consistent with the model bye-laws specified by IBBI. Section 196(2) authorises IBBI to make model bye-laws dealing with matters such as professional competence, professional and ethical conduct, enrolment, monitoring, grievance redressal and disciplinary proceedings. These provisions give operational detail to several functions listed in Section 204.
Current Regulatory Framework
The IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 remain an important part of the regulatory framework for insolvency professional agencies. IBBI lists the regulations as amended up to 13 May 2026 and also published the 2026 Amendment Regulations on that date.
Related IBC Provisions
Section 196: Powers and functions of IBBI, including regulation and monitoring of insolvency professional agencies and model bye-laws.
Section 199: Requirement of a valid certificate of registration for an insolvency professional agency.
Section 201: Registration of an insolvency professional agency.
Section 203: Governing Board of an insolvency professional agency.
Section 205: Bye-laws of insolvency professional agencies.
Section 206: Requirement relating to enrolment and registration of persons acting as insolvency professionals.
Official Legal Resources
India Code - Central Acts and Legislation
IBBI - Insolvency and Bankruptcy Code and Amendment Acts