Section 195: Power to Designate Financial Sector Regulator

Section 195 of the Insolvency and Bankruptcy Code, 2016 (IBC) provided a temporary mechanism for exercising the powers of the Insolvency and Bankruptcy Board of India before the Board was established. It is a transitional provision, not a general power to replace the existing Board.

Text of Section 195

195. Power to designate financial sector regulator. Until the Board is established, the Central Government may by notification, designate any financial sector regulator to exercise the powers and functions of the Board under this Code.

Meaning and scope of Section 195

The provision authorises the Central Government to identify a financial sector regulator through a formal notification to perform the statutory powers and functions of the Board during the interval before the Board's establishment. The words "Until the Board is established" limit the provision to that initial transitional period.

What is a financial sector regulator?

For this purpose, the expression is read with Section 3(18) of the IBC, which defines "financial sector regulator" as an authority or body constituted under a law in force to regulate services or transactions of the financial sector, and includes specified financial regulators. Section 195 does not itself appoint a particular regulator; a Central Government notification would be necessary.

What does "Board" mean?

Under Section 3(1) of the Code, the "Board" means the Insolvency and Bankruptcy Board of India established under Section 188(1). Its substantive powers and functions are primarily described in Section 196.

Present legal relevance: IBBI was established in 2016

Current position: The Insolvency and Bankruptcy Board of India (IBBI) was established on 1 October 2016 under Section 188 of the IBC, through Central Government notification S.O. 3110(E). Consequently, the pre-establishment contingency addressed by Section 195 has ended. The provision remains part of the Code but should not be read as an ongoing general authority to transfer IBBI functions to another regulator.

Today, the IBBI performs its statutory regulatory functions under the Code and applicable rules and regulations. For notifications and amendments, consult the official IBBI website and India Code rather than relying solely on historical summaries.

Section 3(1) and 3(18): definitions of the Board and financial sector regulator.
Section 188: establishment and incorporation of the Insolvency and Bankruptcy Board of India.
Section 195: temporary designation of a financial sector regulator before the Board is established.
Section 196: powers and functions of the Board.
Section 244: transitional arrangements allowing the Central Government to exercise the relevant powers until the Board is constituted or a regulator is designated, as applicable.

Frequently asked questions

Can the Central Government designate a financial sector regulator under Section 195 today?

Section 195 is expressly conditioned on the period before establishment of the Board. Since IBBI was established on 1 October 2016, that specific transitional condition is no longer present.

Does Section 195 abolish or replace the IBBI?

No. It provides only for a temporary designation pending establishment of the Board. It does not abolish the Board or create an ordinary replacement mechanism.

Is Section 195 the same as Section 227?

No. Section 227 deals with notification of financial service providers or categories of providers for insolvency and liquidation proceedings in consultation with appropriate financial sector regulators. Section 195 concerns the initial transition before the Board's establishment.

Official legal sources

Legal information updated 23 October 2026. Refer to the latest statutory text and notifications for specific legal questions.