Power of Central Government

The Reserve Bank has a lot of independence, yet the Government still appoints its Governor and can, in certain situations, give it directions. Every regulator lives between two needs: it must be free enough to act without political pressure, and accountable enough that someone can step in if it fails. The Insolvency and Bankruptcy Code settles this for its own regulator through a cluster of Central Government powers, found mainly in ss.225 to 227 and scattered in other sections.

In two minutes

The Central Government may give the Board binding written directions on questions of policy (s.225), supersede the Board for up to six months in stated cases (s.226), notify financial service providers for proceedings under the Code (s.227), and make rules, remove difficulties and modify how the Code applies to MSMEs (ss.239, 242, 240A).

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