Parliamentary Panel Convenes: Critical Discussions on IBC and RBI’s Evolving Role Promise Economic Progress

New Delhi, India – July 10, 2025 – In a significant move towards bolstering India’s economic framework, the Parliamentary Standing Committee on Finance convened today, embarking on a critical review of the Insolvency and Bankruptcy Code (IBC) and examining the evolving role of the Reserve Bank of India (RBI) in the nation’s dynamic financial landscape. Chaired by BJP MP Bhartruhari Mahtab, the meeting in Parliament House Annexe highlighted the government’s steadfast commitment to ensuring robust financial oversight and regulatory efficiency.

Unpacking the Agenda: A Deeper Look at Financial Oversight

The day’s agenda was packed with pivotal discussions, setting the stage for potential reforms that could redefine India’s economic trajectory. A primary focus was the “Review of working of Insolvency and Bankruptcy Code and Emerging Issues.” This segment involved oral evidence from representatives of major public sector banks, including the State Bank of India, Bank of Baroda, Indian Bank, and Indian Overseas Bank. Their insights are crucial for understanding the practical challenges and successes of the IBC since its inception.

Another cornerstone of the meeting was the session where Reserve Bank of India Governor Sanjay Malhotra briefed the committee on “RBI’s Evolving Role in India’s Dynamic Economy.” This discussion is particularly timely, given the rapid changes in global and domestic economic environments that demand adaptive monetary and regulatory policies. The committee’s recommendations stemming from these deliberations are anticipated to significantly influence the government’s approach to financial legislation and policy-making.

The Imperative for Enhanced Financial Oversight: Addressing IBC Ambiguities

The committee’s deep dive into the IBC comes at a crucial juncture, with ongoing discussions about potential amendments to the code. Sources indicate that the central government is likely to introduce an amendment to Section 31(4) of the IBC during the upcoming monsoon session of Parliament. This specific section currently mandates prior approval from the Competition Commission of India (CCI) for any resolution plan.

The impetus for this proposed amendment arises from recent Supreme Court observations, notably during the hearing of the resolution plan for AGI Greenpac. The apex court had deemed AGI Greenpac’s resolution plan unsustainable without the requisite CCI approval, emphasizing the critical need for compliance. The Supreme Court’s observation in January 2025 underscored that a resolution plan approved by the Committee of Creditors (CoC) without CCI sanction could not be sustained and must be set aside.

The proposed amendment aims to streamline the resolution process by potentially reducing the dependency on CCI approval for certain aspects, thereby alleviating the load on the competition watchdog and expediting insolvency proceedings. This legislative refinement, driven by the need for practical efficiency and judicial clarity, reflects a proactive approach to strengthening the IBC framework. Effective financial oversight necessitates a framework that is both robust and agile, capable of addressing unforeseen complexities.

RBI’s Expanding Mandate: A Pillar of Financial Oversight

The briefing by RBI Governor Sanjay Malhotra underscored the central bank’s expanding mandate beyond traditional monetary policy. In an economy undergoing rapid digitalization and facing global economic uncertainties, the RBI’s role in maintaining financial stability, regulating the banking sector, and fostering economic growth has become increasingly multifaceted. The committee’s engagement with the RBI Governor is a testament to the parliamentary desire for comprehensive financial oversight over the nation’s monetary guardian.

Previous committee meetings on May 28 and 29 had already flagged “ambiguities” within the IBC, highlighting the ongoing need for clarity and refinement in the legal framework. The insights provided by the RBI Governor and the public sector bank representatives are vital for the committee to formulate well-informed recommendations that align with both the spirit of the IBC and the practical realities of its implementation.

The Path Forward: Towards a Resilient Financial Future

The Parliamentary Standing Committee on Finance plays an indispensable role in shaping India’s economic policies through its diligent scrutiny and expert consultations. The discussions today are not merely academic exercises but are directly linked to the future stability and growth of the Indian economy. By reviewing the working of critical legislations like the IBC and assessing the evolving functions of institutions like the RBI, the committee ensures a proactive and adaptive approach to economic governance.

The deliberations will culminate in a report to Parliament, which will likely contain key recommendations on legislative amendments, policy adjustments, and institutional reforms. These recommendations will be instrumental in fostering a more transparent, efficient, and resilient financial system. The collective wisdom of the committee, informed by the varied perspectives of financial experts and banking professionals, promises a positive impact on India’s economic journey. The emphasis on robust financial oversight will undoubtedly contribute to a more stable and predictable economic environment, attracting further investment and fostering sustainable growth.

The importance of continuous financial oversight cannot be overstated in today’s interconnected global economy. As India continues its trajectory of economic development, the insights and policy recommendations emerging from such parliamentary committees become crucial for navigating challenges and capitalizing on opportunities.