Resolution Plan explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A resolution plan for a financial service provider has to clear an extra gate. Beyond the committee of creditors and the Adjudicating Authority, the appropriate regulator must issue a no objection on fit and proper criteria for whoever will control or manage the FSP afterwards.
The additional plan content
A resolution plan for an FSP must include a statement on how the resolution applicant satisfies the requirement of engaging in the business of a financial service provider in consonance with the laws applicable.
This is a requirement no ordinary corporate resolution plan carries. A resolution applicant for a manufacturer needs money and a credible business plan. A resolution applicant for an FSP needs those things and the ability to lawfully carry on a regulated business — capital adequacy, governance, and whatever else the sectoral law demands. A plan that funds the balance sheet but leaves the acquirer unable to hold the licence resolves nothing.
The three approvals
| Step | Who | Provision |
|---|---|---|
| 1. Commercial approval | Committee of creditors | Section 30(4) |
| 2. No objection | Appropriate regulator, on the Administrator's request | Rule 5, on fit and proper criteria considering section 29A |
| 3. Approval of the plan | Adjudicating Authority | Section 31 |
The sequence matters. The Administrator seeks the no objection after the committee has approved the resolution plan and before it goes to the Adjudicating Authority under section 31. Approaching the regulator earlier would ask it to assess a plan the creditors may never accept; later would put the Adjudicating Authority in the position of approving a plan the regulator might veto.
The no objection is sought for those who will be in control or management of the FSP after approval — and it is issued on fit and proper criteria, considering section 29A.
The regulator is not second-guessing the commercial terms. It is answering one question: would this person be permitted to run a regulated financial firm? A resolution plan is a change of control of a licensed entity, and the ordinary route to that control would require the regulator's approval. The rule preserves that requirement inside the insolvency process rather than letting section 31 override it.
Fit and proper, alongside Section 29A
Two filters run together, and they are not the same:
- Section 29A disqualifies certain persons from being resolution applicants at all — undischarged insolvents, wilful defaulters, those with NPA accounts beyond the specified period, persons convicted of specified offences, disqualified directors, connected persons and others.
- Fit and proper is the regulator's own standard for who may control a regulated entity — integrity, reputation, competence, financial soundness and record.
An applicant may clear section 29A and still fail the regulator's fit and proper test. The rule requires the regulator to consider section 29A when issuing the no objection, so the statutory disqualifications feed into the supervisory judgement rather than replacing it.
Why the licence drives all of this
Rule 5 protects the FSP's licence or registration from suspension or cancellation during the interim moratorium and the CIRP. That protection is what makes a going-concern resolution possible — and it is also what makes the no objection necessary. The licence survives into the hands of whoever the resolution plan puts in control, so the regulator must be satisfied about that person before the plan is approved.
Without the no objection step, the insolvency process would become a route to acquiring a financial services licence without regulatory scrutiny.
Practical points for a resolution applicant
- Address the ability to carry on the regulated business in the plan itself; it is a stated requirement of the resolution plan, not a later formality.
- Identify clearly who will be in control or management after approval — that is who the regulator assesses.
- Prepare the section 29A position and the fit and proper material together.
- Build the no objection into the timeline; it sits between the committee's approval and the section 31 application.
Common mistakes
- Treating the committee's approval as the last commercial hurdle.
- Assuming clearing section 29A is the same as being fit and proper.
- Seeking the no objection before the committee has approved the resolution plan.
- Omitting the statement on carrying on the FSP business from the plan.