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Insolvency and Bankruptcy Board of India (IBBI)

Insolvency and bankruptcy code was established on 2016. IBC was introduced to resolve financial problems of company, organizations and individuals. IBC have four pillars and through these pillars the corporate insolvency resolution process (CIRP) executed.

These pillars are:
Insolvency Professionals (IP), Information Utilitis (IU), Adjudicating Authority (AA) and Insolvency And Bankruptcy Board Of India (IBBI). Throughout this article we are going to study about the fourth pillar of IBC, the Insolvency And Bankruptcy Board Of India.

Insolvency and Bankruptcy board is the regulator of the whole CIRP process. IBBI was established on 1st October 2016. This board is established under SECTION-188 of IBC, 2016. IBBI plays crucial role in promoting a more efficient and transparent insolvency and bankruptcy framework in the country. IBBI regulates profession as well as process.
  • Members of IBBI are registered under SECTION-189 of IBC. - CHAIR PERSON - Three members among the officers of the central government. - One member must be appointed by Reserve Bank of India (RBI) - Five members by the central government and three of them should be full time members. SECTION 232 says that all members of insolvency and bankruptcy board of India are public servants according to SECTION 21 of the Indian Penal Code 1860.
  • According to SECTION 233, no suits, prosecution can be brought against, the chair person and other members of the resolution process if it is done with an intention in good faith.

Powers Given To IBBI:

Significant powers are given to insolvency and bankruptcy board of India to manage and conduct all the procedures. SECTION 196 of IBC grants the powers to make regulations consistent with the provisions of the code and rules made there under.
  • It includes the power to establish rules and guidelines to govern various aspects of insolvency and bankruptcy proceedings.
  • IBBI has the power to regulate IPs, IUs, and IPAs. The registration of all these service providers occurs under IBBI. It ensures that qualified and ethical professionals handle insolvency cases.
  • IBBI also sets procedures for the adjudicating authorities to handle insolvency matters effectively.
  • SECTION 196(3) of IBC gives the power of a civil court to the IBBI while trying a suit.
  • It can set fees and charges payable to the IBBI for various services, registrations, and processes.
  • It can watch over and ensure that all service providers are working correctly.
  • Under SECTION 230, IBBI has the power to delegate any power or function to any of its members if necessary. But powers under SECTION 240 can't be delegated.

Functions Of IBBI:

The measure functions of IBBI are INSPECTION and INVESTIGATION.
  • Under SECTION 217 complaint can be filed against IPs, IUs and IPAs if anyone's fundamental right is getting hurt or if anything wrong in their functions.
  • If the IBBI finds IP, IU, or IPA have committed any breach then it may appoint any person to work as an investigating authority to conduct an investigation under SECTION 218.
  • After investigation, IBBI can issue a show cause notice to the service providers under SECTION 219.
  • SECTION 220 deals with the appointment of the disciplinary committee.
  • If IPs, IUs, or IPAs are found or proven guilty, they may also receive punishment from the insolvency and bankruptcy board of India:
    • It can set a penalty of up to three times the loss caused or three times the unlawful gain.
    • They can also suspend or cancel the registration of the IP, IU, or IPA.

Challenges Faced By Ibbi In Implementing The IBC:

  • A significant hurdle lies in the delays that occur during the resolution process. The extended duration of legal proceedings, ongoing disputes, and the intricate nature of cases can all contribute to these delays, ultimately affecting the IBC's efficiency.
  • India's setup for handling insolvency, which involves having enough insolvency experts and the necessary information systems, required additional improvements to efficiently fulfill the requirements of the INSOLVENCY AND BANKRUPTCY CODE.
  • In certain instances, creditors have been compelled to endure substantial losses or reductions in the value of their claims. This situation can act as a deterrent for lending and exert an influence on the credit markets.
  • Creditors, in specific scenarios, have been required to make considerable concessions or absorb losses on their owed amounts. This may lead to reduced lending activities and repercussions in the credit markets. These are the measure challenges faced by INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (IBBI).

Recent Improvements & Developments Of IBBI:

  • Now in recent years IBBI is using technology to make the process of dealing with financial problems and bankruptcies faster and easier. This means they are using digital tools to keep a close eye on these cases and make them more understandable.
  • There have been efforts to provide more clarity in insolvency regulations and procedures, ensuring that stakeholders have a better understanding of the process.
  • Improved engagement and communication with various stakeholders, including creditors, debtors and insolvency professionals, can lead to smoother.
  • Currently they are focusing to make the CIRP process faster and following tight schedules has been a top goal. This means they want to get things done more quickly.
  • IBBI continues to focus on maintaining high standards for insolvency professionals through certification, training, and a code of conduct.
  • The development of a more effective case management system to track and manage insolvency cases has been an ongoing area of improvement.

The insolvency and bankruptcy board of India holds a crucial position in India's economic framework, responsible for managing the Insolvency and Bankruptcy code. Although it encountered obstacles along the way, substantial progress has been achieved in simplifying the resolution process and promoting transparency.

By harnessing technology, clarifying regulations, and maintain an ongoing commitment to involving all parties, IBBI has reinforced the structure for addressing financial troubles and corporate insolvencies. As we look to the future, the prospects for IBBI and the IBC are undeniably optimistic.

With the IBC maturing and taking root, it is poised to instill a culture of responsible lending and borrowing, which in turn will boost investor confidence. Furthermore, this maturation process is expected to streamline the resolution of financial issues, expediting the process and making it more efficient. A crucial role that IBBI plays is in the prudent allocation of resources, minimizing the burden of nonperforming assets on banks.

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