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One of the main aims of the Insolvency and Bankruptcy Code, 2016 was resolution in a timely manner. It has now become a reality by forming a tool which endeavours to provide undisputed information. Such a tool is called as an information utility. Along with the provisions of National e-governance Services Limited, the single station enumerating all the financial transactions of lenders gave approval by the Insolvency and Bankruptcy Board of India, helping it to be the first Information Utility under the Insolvency and Bankruptcy Code, 2016.
was a need for such an instrument for bridging the gap that was found in the
resolution process. There were apprehensions regarding the information to
establish a fact. Information utility will offer information for the
resolution, and the courts shall also dispose of the cases swiftly.
The biggest obstacle in the path of resolution of a process has been identified as lack of information. Among all the important steps, the essential one would be to establish the facts correctly regarding what all assets are available, who the claimants are and what contracts are in force. Here the role of Information Utility (IU) shall come to the fore. IU shall store the information of the users, thereby allowing the lenders to take the informed decision about credit transaction and the information that it provides can be used as shreds of evidence in bankruptcy cases.
National e-governance Services Limited is owned by the leading public financial institutions, and it was incorporated as a union Government company. It deals with critical financial information that has the objective of serving the financial sector and its stakeholders. It’s owned by the State Bank of India and Life Insurance Corporation among others.
National e-governance Services Limited (NeSL) was instituted to expand the
Information Infrastructure of India with its focus mainly on the delivering
services for government and public financial institutions. The IBBI (Insolvency
and Bankruptcy Board of India) has registered the National e-governance
Services Limited as the first IU in accordance with the IBBI Regulations (IU),
information utility is an information network that provides information
regarding financial aspects like borrowings, defaults, security interests,
among others. This utility shall provide financial information to businesses,
adjudicating authorities, financial institutions, resolution professionals,
stakeholders etc. The information utility not only provides but also collects, collate, and authenticate the financial
information. The object of such collection, collation, authentication, and
dissemination of financial information of debtors is to facilitate quick
decision making in the resolution proceedings.
Information utility is registered under Section 210 of the Insolvency and Bankruptcy Code (IBC), 2016. It is governed and regulated by the Insolvency and Bankruptcy Board of India.
stands for Insolvency and Bankruptcy Code. IBC is a law that looks to
consolidate the existing framework by making a uniform code for insolvency and
Bankruptcy. Insolvency and Bankruptcy Code was implemented through an act of
parliament. The law was initiated due to a large number of non-performing loans
of banks and sluggishness in debt resolution. The code received the assent of
the President on May 28th 2016.
object of the IBC is to ensure smooth and economically viable resolution for
resolving insolvencies. It aims to protect the interests of small investors.
IBC helps in improving the ease of doing business.
The various kinds of information
stored under information utilities are listed below:
According to section 215(2) of the IBC 2016, the financial information and other information related to the assets shall be submitted by the financial creditor. A financial creditor is someone to whom a financial debt is owed. It is the duty of the financial creditor to submit such information.
The operational creditor can also submit financial information to the IU according to section 215(3) of the IBC. An operational creditor is someone who is the supplier of goods and services to a firm or a company.
Insolvency professional, regarding any insolvency, resolution, liquidation or bankruptcy proceedings, may also submit information to the Information utility under regulation 38(1).
There are a number of
responsibilities that an information utility (IU) must perform to ensure the
authenticity of the information. These are enumerated below:
Also, Read: NBFC’s To Submit Financial Information with NeSL – RBI’s First IU under IBC.
A set of steps must be followed in
order to submit the information to the IU. The procedure followed to submit
information to the IU is as follows:
information to be submitted must be submitted in Form C under regulation 20 of
IBBI regulations, 2017.
information that is received is forwarded for authentication.
National e-governance Services Limited (NeSL), after the receipt of the information,
will assign a unique identifier to the information and shall notify the user
about the unique identifier, the terms and conditions of authentication and
verification of the information. It shall also notify about the consent
framework for allowing the third parties to have access to the information.
the user may authenticate or can disagree with all or part of the information
within the prescribed time period. The time period shall be prescribed by the
status of the authentication shall be sent to the one who submitted the
the person who authorises the information must affix his digital signature or
the Aadhar based e-sign whenever the information is put up on the platform.
the NeSL will verify the identity of the authenticator and the NeSL shall have
no further responsibility in case the information of the submitter is either
not authenticated or disputed.
order to ensure a greater degree of credibility of IU, the following points
must be kept in mind:
this tool provides financial information’s and various other providences, it
also faces certain challenges and concerns.
Among all the challenges, the real challenge is receiving authentication
from the other party. Authentication is an essential ingredient for its success.
Information will be like evidence only when the authentication of the
information is achieved due to the sensitivity of the information or resistance
in sharing information. The other party
in this context includes the financial creditors, operational creditors and
corporate debtors. Getting information from these could pose a challenge
considering there might be resistance in sharing the information.
issue of privacy of data is another debatable concern hounding this service.
Although there is a risk management framework approved by the board of National
e-governance Services Limited that deals with the security and the integrity of
the system and information at the same time. It will take care of the procedure
to recover the information in case there is any unforeseen disaster, whether man-made
or natural. However, the data stored in the digital database is still not
immune to data theft and piracy. A more effective and well-equipped security
system would be appreciated by the masses. It would deter unwanted and
unauthorised access to vital information. The data that the IU contains is
highly sensitive; therefore, a foolproof security system must be used to thwart
the advances of the violators.
origin of the Information Utility is without any doubt a great initiative in these
times. Access to the information makes it even more productive. It definitely
provides the stakeholders with a platform to make a little more conscious
decisions. It provides lenders and creditors with all the necessary information
about the insolvency resolution procedure.
of information has been the greatest hindrance to an effective resolution. The
creation of this tool would help in avoiding this hindrance, thereby leading to
effective resolution. It would make the process much better and NeSL being the
only Information Utility in the country would hopefully fulfil the need for
account aggregation by ensuring a reliable storage and information source. One
of the important aspects is that the wealth of information will be stored in a
central server located in India, which will be regulated and governed by the
Indian rules and regulations.
Read, More: Submission of Financial Information to Information Utility.
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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