New IBC moots ₹2-cr fine, nixing licence for errant RPs

With a view to increase their accountability, resolution professionals (RPs) could be in for stricter action under the proposed Insolvency and Bankruptcy Code (Amendment) Bill, 2025, which will empower the “disciplinary committee” to impose penalties of up to ₹2 crore, suspend, or even cancel their regi strations for “unlawful gains”.

- Priyanka Gawande & Krishna Yadav

The draft law lands at a time when lenders have been moving to replace RPs in high-profile insolvency cases.

If the proposals are approved, what will change from the current norms are the penalties— with the maximum being doubled from ₹1 crore—and more teeth to the “disciplinary committee”, the Insolvency and Bankruptcy Board of India (IBBI), that can act faster with show cause notices. The RPs will be classified as “service providers”, putting them clearly under IBBI’s regulatory net.

Corporate debtors will also no longer be able to nominate their resolution professional when filing a Section 10 application, which allows firms to voluntarily initiate corporate insolvency resolution process. Instead, the National Company Law Tribunal (NCLT) will refer names to IBBI in a bid to lower the risk of biased appointments.