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Govt Notifies Rules Under Insolvency Law For Resolution of Financial Service Providers

The Ministry of Corporate Affairs has notified new rules for the insolvency and liquidation process of systemically important financial service providers, excluding banks. The new rules allow regulators like RBI, SEBI, and IRDA to initiate insolvency proceedings and appoint an administrator to oversee the process while continuing to supervise the financial service provider. The moratorium period will begin as soon as the regulator files an insolvency application, and the provider's license will not be revoked during the proceedings.

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39 views1 page

Govt Notifies Rules Under Insolvency Law For Resolution of Financial Service Providers

The Ministry of Corporate Affairs has notified new rules for the insolvency and liquidation process of systemically important financial service providers, excluding banks. The new rules allow regulators like RBI, SEBI, and IRDA to initiate insolvency proceedings and appoint an administrator to oversee the process while continuing to supervise the financial service provider. The moratorium period will begin as soon as the regulator files an insolvency application, and the provider's license will not be revoked during the proceedings.

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SPD TIWARI
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© © All Rights Reserved
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Govt notifies rules under insolvency law for resolution of financial service providers

News:The Ministry of Corporate Affairs (MCA) has notified the Insolvency and
Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and
Application to Adjudicating Authority) Rules,2019.
Facts:
About the rules:

 The rules allow the insolvency and liquidation process to be undertaken against
systemically important financial service providers(FSP) so long as such
proceedings are triggered by the concerned regulator.However, these rules will not
be applicable to banks.
 Depending upon the FSP,the regulator could be the Reserve Bank of India (RBI),
Securities and Exchange Board of India (Sebi) or Insurance Regulatory and
Development Authority.
 The regulator will appoint an administrator and will supervise the entire
process.The administrator would have the same duties and powers of an
insolvency professional, interim resolution professional, resolution professional or
liquidator as the case may be.
 The concerned regulator may also constitute an Advisory Committee of three or
more experts to advise the administrator in the operations of the FSP during the
resolution process.
 However,unlike the corporate insolvency process,the moratorium period for FSPs
will begin as soon as the application for insolvency is filed by the regulator.
 The licence or registration which allows the financial service provider to run its
business will not be quashed during the insolvency process.

Additional information:
About Financial service providers(FSP):

 Financial Services providers is a term used to refer to the services provided by the
finance market.

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