NBFC’s To Submit Financial Information with NeSL – RBI’s First IU under IBC

Shailza Sharma

26 Aug, 2020

RBI has issued a circular dated 19^th December 2017, directing NBFC’s to furnish its financial and assets related information to the Information Utility.

The circular mentioned above regulated by RBI has asked banks and other financial institutes like NBFC’s to share information about their assets of creditors with Information utilities registered under IBC, 2016. Such directives of the Reserve Bank of India will help Information utilities to store financial information.

Further, this stored information can be used to establish defaults and verify the claims expeditiously to complete transactions under the IBC in a time-bound manner. Currently National E-Governance Service Limited (NeSL) is the only Information utility registered in India. The Main role of NeSL is to holding the information regarding any debt/ claim, as submitted by the financial or operational creditor and verified and authenticated by the parties to the debt.

What is Information Utility?

An information utility is a professional organization, registered under section 210 of IBC, 2016. The role of this organization is to collect financial information and get the authenticity of the said information by other parties connected to the debt and store the same. Further, to provide the collected information to the resolution professional, creditors, and stakeholders during the process of insolvency. Subsequently, the stakeholder can avail of this information at the time of insolvency and can make their decision accordingly. The main significance of Information Utility expected that with its process the information gathered would reduce the amount of NPA’s in the banking sector.

What are the offerings of Information Utility?

Section 3(9) of IBC, 2016 defines the “core services’’ as services rendered by IU;

• Acceptance of electronic submission of financial service.
  • Safe and accurate recording of financial service.
  •  Authenticating and verifying the financial information submitted by a person.
  • Providing access to information stored with the information utility to person as may be specified.

What is the role and obligations of Information Utilities?

1. Create and store information in a universally acceptable format.
2. To act as regulated information agency which shall accept, electronically record, get authentication, maintain and provide access to financial information to the creditors, adjudicating authority and any other person who intends to submit such information.
3. To accept the financial information under subsection (1) of section 215 of IBC, 2016 under the format as specified in chapter V of the IU regulation.
4. Should meet the minimum service quality standard as may be prescribed by IU regulations.
5. To publish such statistical information as may be specified by IU regulations.

Also, Read: Capital Adequacy Ratio [CAR] – Definition, Calculation and Importance.

What is financial Information?

Section 2(13) of the IBC, 2016 defines financial information is nonpublic information with the connection to an individual regarding:  

• Regarding Individual’s Assets
• Debt Record Of Person
• Information concerning to his liabilities
• Financial information also includes information held for the purpose of credit or loan acquisition, account access, or transaction initiation.

Who is required to submit the information with IU?

Creditors; who can be financial or operational creditors, debtors, co-applicant, co-borrower, Guarantor, any party which has a connection to debt are required to furnish their financial information to IU.

What is the procedure for the submission of financial information?

Any person who is required to submit its information to IU has to enroll him/herself as a user with the IU and provide its identification. For the identification documents required are ;

• Addhar Card
• Pan Card
• CIN Number

Further, NeSL will verify the identity and then after user registration will consider being completed. User ID and Password will be created, and then share it with the user through email. Post this; the user can provide the debt information as according to the form C and, shall be signed digitally by the authorized signatory.

The format of submitting the financial information shall be according to the Form- C data input File Format as prescribed by NeSL. For the detailed information regarding the registration, information related to submission kindly refers to the following link. See here: https://nesl.co.in/

What is the fee structure for filling the Financial Information?

Fee Structure for submission of data or any document by the financial or operational creditor for Information Utility is as;

• Annual Fee for
  • For the first Credit Facility: Rs. 500/-
  • For every additional credit facility: Rs. 100/-
• Annual Fee for
  • Uploading of 4 documents for a Corporate debtor: Rs 500/-
  • For each document of size greater than 1MB: Rs 30 per MB (charges apply for each additional MB)
  • Fee for submission of data and two Documents: Rs 200/-
• For each document of size greater than 1MB: Rs 30 per MB (charges apply for each additional MB, and 1 MB should normally contain three pages only)

Who can access the information stored with Information utility?

• Registered user
  • Corporate person and their Auditor
  • Parties to the debt and banks 
  • Insolvency professionals
  • Any authorized person under any other law

Other features OF IU;

• Annual Statement Information provided to the registered user. 
• If any information is missed or the user wants to modify any given information, the same can be rectified by giving a valid reason.
• After uploading the information, the information will be preserved for the 8 years from the date when it was uploaded.
• NeSL has Web-based grievance redressal mechanism, where user can lodge his/her any issue related to the procedure or any other related issue. The grievance shall be provided within 7 working days.

Conclusion

With the above information, we can conclude that such step of storing all the financial information, which is accessible by any authorized person, is virtually providing a platform to stakeholder. During insolvency, the stakeholder can take prudent decisions. The most important aspect is the gathered information by IU will act as a deterrent to an effective resolution. NeSL is believed to be the source of providing the most relevant information about the financial, default and security of any corporate entity.

Also, Read: Submission of Financial Information to Information Utility.