Submission of Financial Information to Information Utility

Narendra Kumar

18 Dec, 2020

Insolvency and Bankruptcy Code (IBC), 2016 is the bankruptcy law that consolidated all the laws related to insolvency in India by creating a single law. Insolvency is defined as the inability of debtors, individuals or corporates to repay their debts. On the other hand, bankruptcy happens when debtors, individuals or corporates are declared incapable of repaying their debt. Thus, bankruptcy is just a formal declaration of insolvency. The bankruptcy code is one stop solution for resolving insolvencies of all companies, partnerships, and individuals (other than financial firms). Which is a very long process in earlier law however it is expected the process will be shorter in this law.  This will not only improve the ease of doing business in India but also facilitate a better and faster debt recovery mechanism in the country. In this article know brief about Information Utility Online.

An Information utility ” means ” a person who is registered with the IBBI (Board) as an information utility online under section 210 of the code. It is authorized to carry on the business of IU and is governed and regulated by IBBI as per the provisions of IBBI subject to conditions specifically provided under the Code. The information utilities shall act as a regulated information agency which shall accept, electronically record, get authentication, maintain and provide access to financial information to the persons as may be specified in the Act, e.g., creditors, Adjudicating Authority and other persons having interest in the information. As on date, National E-Governance Services Limited (NeSL) is the first IU registered under the IBBI (IUs) Regulation, 2017.

Direction

According to Section 215 of Insolvency and Bankruptcy Code (IBC), 2016, a financial creditor shall submit financial information report and information relating to assets in relation to which any security interest is created, to an information utility (IU) in such form and manner as may be specified by Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017.

All Financial Institution (FIs) includes Scheduled Commercial Bank including Regional Rural Banks, Small Finance Bank, Local Area Banks, Co-operative Banks, Non-Banking Financial Companies and Assets Reconstruction Companies as per the Notification given by RBI dated 19^th December, 2017 under which obliged to submit financial information report and information relating to assets in relation to which any security is created.

According FIs are required to take registration in IUs as prescribed by IBBI under IBC Code 2016. National e-Governance Services Ltd (NeSL) is the 1^st IUs registered in IBBI (IUs) Regulation, 2017. Hence all FIs having such transaction are required to take registration of National e-Governance Services Ltd (NeSL) as per Notification No. RBI/2017-18/110 DBR.No.Leg.BC.98/09.08.019/2017-18 dated 19^th December 2017 which states or instructs all FI regulated by RBI^[1] to take registration of IUs for submitting Financial Report.

Financial Information Contains: –

Financial information in relation to a person, means, one or more of the following categories of information

1. Records of the debt of the person;
2. Records of liabilities when the person is solvent;
3. Records of assets of a person over which security interest has been created;
4. Records, if any, of instances of default by the person against any debt;
5. Records of the balance sheet and cash flow statements of the person; and
6. Such other information as may be specified.

The Step-Wise registration procedure of All FIs to take a registration in IUs is as follows: –

Entity i.e. All FIs regulated by RBI required to pass Board Resolution with Authority Letter for the appointment of Authorised Representative to undertake this task.

After that being authorized representative, the person will be termed as Super User who is required to register for IUs and Aadhaar Authentication be validated. Afterward, an entity will be authenticated via PAN card.

Proceeding ahead the Super User is required to feed the entity details and has to upload with attaching DSC. Once required documents are uploaded then the same will be verified by NeSL.

Moving forward on the satisfaction of verification of documents submitted by the entity, the concern officer email/SMS to Super User confirming Entity ID and User ID along with a password, have the option to change login details of an entity.

Checklist of Documents

It is suggested to keep the following documents ready for furnishing the details in the user registration form:-

1. Aadhaar Number of Person authorized to represent the entity for submission of Information
2. PAN Number of Entity
3. A pre-signed copy of Authority Letter from Entity/Board Resolution authorizing person to represent the entity for submission of information
4. Digital Signature Certificate (DSC) of Entity/ e-signature of Authorised Representative for Authenticating the data/documents
5. Bank Account Statement/Certificate from banker certifying the details of Name of Account, Account Number, Constitution, PAN number, name of Authorised Signatory, Branch IFSC Code, telephone number, Email id of the bank branch

Concluding the requirement for registration of all FIs to IUs under IBC, 2016 read with IBBI (IUs) Regulation, 2017 for submission of financial information directed by notification of RBI dated 19^th Dec, 2017 now onwards it’s an obligation to all financial institution regulated by RBI requires immediate placement of appropriate systems and procedures to ensure compliance to the provisions of the Code and Regulations.

Read our article: Understanding Information Utility under IBC