Section 244: Transitional Provisions under the Insolvency and Bankruptcy Code, 2016

Section 244 of the Insolvency and Bankruptcy Code, 2016 is a transitional provision designed to prevent a regulatory vacuum during the initial implementation of the Code. It authorised the Central Government to exercise specified powers and functions until the Insolvency and Bankruptcy Board of India was constituted or a financial sector regulator was designated under Section 195, as applicable.

Present relevance: The Insolvency and Bankruptcy Board of India was established on 1 October 2016. Accordingly, the part of Section 244 that temporarily placed the Board's powers and functions with the Central Government served the transition before constitution of the Board and should not be read as describing the present regulatory arrangement. IBBI now performs its statutory regulatory functions under the Code.

Updated: 30 September 2026.

Text of Section 244

244. Transitional provisions.

(1) 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 financial sector regulator, including its power to make regulations, shall be exercised by the Central Government.

(2) Without prejudice to the generality of the power under sub-section (1), the Central Government may by regulations provide for the following matters:-

(a) recognition of persons, categories of professionals and persons having such qualifications and experience in the field of finance, law, management or insolvency as it deems necessary, as insolvency professionals and insolvency professional agencies under this Code;

(b) recognition of persons with technological, statistical, and data protection capability as it deems necessary, as information utilities under this Code; and

(c) conduct of the corporate insolvency resolution process, insolvency resolution process, liquidation process, fresh start process and bankruptcy process under this Code.

Meaning and Purpose of Section 244

A transitional provision is a statutory mechanism that regulates the movement from an earlier legal or institutional arrangement to a new one. Section 244 was included so that implementation of the Insolvency and Bankruptcy Code would not be delayed merely because the new regulator or a designated financial sector regulator had not yet become operational.

The provision therefore gave the Central Government temporary authority to exercise the relevant powers and functions, including regulation-making power, during the specified transitional period.

Section 244(1): Temporary Exercise of Regulatory Powers

Section 244(1) applies until the occurrence of the event identified in the provision: constitution of the Board or designation of a financial sector regulator under Section 195, as the case may be. During that interval, the Central Government was authorised to exercise the powers and functions that would otherwise belong to the Board or the designated regulator.

The reference to the Board is to the Insolvency and Bankruptcy Board of India established under the Code. IBBI is a statutory regulator forming part of the institutional framework for insolvency and bankruptcy administration in India.

Constitution of the Insolvency and Bankruptcy Board of India

IBBI was established on 1 October 2016 as a key institutional pillar of the new insolvency framework. The transitional substitution contemplated by Section 244(1), insofar as it concerned the period before constitution of IBBI, therefore fulfilled its immediate purpose once the Board was constituted.

Section 244 remains part of the Code, but its wording must be understood in its transitional context. Current regulations and regulatory actions should be checked through the official IBBI legal framework rather than treating the Central Government as presently exercising IBBI's ordinary statutory functions under this transitional clause.

Section 244(2): Matters Covered During Transition

Sub-section (2) identifies important matters for which the Central Government could make regulations during the transitional period without limiting the broader power in sub-section (1).

Recognition of insolvency professionals and professional agencies

Clause (a) concerns recognition of persons and categories of professionals possessing qualifications and experience in finance, law, management or insolvency as insolvency professionals and insolvency professional agencies. Insolvency professionals perform statutory functions in insolvency, liquidation and bankruptcy processes, while insolvency professional agencies form part of the professional regulatory framework under the Code.

Recognition of information utilities

Clause (b) concerns recognition of persons having the necessary technological, statistical and data protection capability as information utilities. Information utilities are regulated entities under the Code that provide core information services relating to financial information and records relevant to insolvency proceedings.

Conduct of insolvency, liquidation and bankruptcy processes

Clause (c) permitted transitional regulations concerning the conduct of the corporate insolvency resolution process, insolvency resolution process, liquidation process, fresh start process and bankruptcy process under the Code.

Relationship with Section 195

Section 244 expressly refers to designation of a financial sector regulator under Section 195. The reference forms part of the transitional architecture of the Code: where the statutory scheme contemplated functions of a designated financial sector regulator, Section 244 ensured that the relevant powers could be exercised by the Central Government until such designation occurred.

Practical Significance

Section 244 prevented an institutional gap during the commencement and implementation of the Code.
It temporarily vested relevant regulatory powers and functions in the Central Government.
It expressly included the power to make regulations during the transition.
It identified recognition of insolvency professionals, insolvency professional agencies and information utilities as important transitional matters.
It also covered regulations governing insolvency resolution, liquidation, fresh start and bankruptcy processes.
Following establishment of IBBI, the provision should be read in its historical and transitional setting rather than as a statement of the present regulatory structure.

Official Legal Resources

IBBI - Insolvency and Bankruptcy Code and Amendment Acts

IBBI - Regulations under the Insolvency and Bankruptcy Code

IBBI - Notifications under the Insolvency and Bankruptcy Code