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The Tax Publishers Insolvency and Bankruptcy Code, 2016--Financial Service Provider Financial Service Providers under the Ambit of IBC Pragya Bhandari The learned author in this write-up tries to discuss an overview of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 and its implications in the insolvency as well as liquidation proceedings of the Financial Service Provider. 1. Prelude Section 227 of the Code empowers the Central Government to notify, in consultation with appropriate financial sector regulators, the Financial Service Providers (FSPs) or categories of FSPs for the purpose of their insolvency and liquidation proceedings that may be conducted under the Code. For the purpose of providing a generic framework for insolvency resolution proceedings as well as liquidation proceedings of FSPs, the Ministry of Corporate Affairs has notified Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 (Hereinafter referred to as the 'FSP Rules'), on 15-11-2019. The introduction of the generic framework has sparked concerns about the overall stability of the financial sector. The FSP Rules do not apply to banks, at present, for whom the provisions of the Banking Regulation Act, 1949 which have enabling provisions for the resolution of banks continue to apply. Hitherto, the FSPs were kept outside the purview of the Code. An Explanation as inserted to section 227 vide Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019, dt. 28-12-2019 as well as the FSP Rules clarify that all provisions of the Code regarding corporate insolvency resolution process, liquidation process and voluntary liquidation process for a corporate debtor would apply to FSPs with certain modifications as described in the FSP Rules. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Insolvency and Bankruptcy Code, 2016--Financial Service Provider

Financial Service Providers under the Ambit of IBC

Pragya Bhandari

The learned author in this write-up tries to discuss an overview of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 and its implications in the insolvency as well as liquidation proceedings of the Financial Service Provider.

1. Prelude

Section 227 of the Code empowers the Central Government to notify, in consultation with appropriate financial sector regulators, the Financial Service Providers (FSPs) or categories of FSPs for the purpose of their insolvency and liquidation proceedings that may be conducted under the Code. For the purpose of providing a generic framework for insolvency resolution proceedings as well as liquidation proceedings of FSPs, the Ministry of Corporate Affairs has notified Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 (Hereinafter referred to as the 'FSP Rules'), on 15-11-2019. The introduction of the generic framework has sparked concerns about the overall stability of the financial sector. The FSP Rules do not apply to banks, at present, for whom the provisions of the Banking Regulation Act, 1949 which have enabling provisions for the resolution of banks continue to apply. Hitherto, the FSPs were kept outside the purview of the Code.

An Explanation as inserted to section 227 vide Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019, dt. 28-12-2019 as well as the FSP Rules clarify that all provisions of the Code regarding corporate insolvency resolution process, liquidation process and voluntary liquidation process for a corporate debtor would apply to FSPs with certain modifications as described in the FSP Rules.