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<\/strong>.<\/p>\n\n\n\n There\nwas a need for such an instrument for bridging the gap that was found in the\nresolution process. There were apprehensions regarding the information to\nestablish a fact. Information utility will offer information for the\nresolution, and the courts shall also dispose of the cases swiftly.<\/p>\n\n\n\n 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<\/em><\/strong>) 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.<\/p>\n\n\n\n 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<\/a><\/strong> among others. <\/p>\n\n\n\n The\nNational e-governance Services Limited (NeSL) was instituted to expand the\nInformation Infrastructure of India with its focus mainly on the delivering\nservices for government and public financial institutions. The IBBI (Insolvency\nand Bankruptcy Board of India) has registered the National e-governance\nServices Limited as the first IU in accordance with the IBBI Regulations (IU),\n2017. <\/p>\n\n\n\n An\ninformation utility is an information network that provides information\nregarding financial aspects like borrowings, defaults, security interests,\namong others. This utility shall provide financial information to businesses,\nadjudicating authorities, financial institutions, resolution professionals,\nstakeholders etc. The information utility not only provides but also collects, collate, and authenticate the financial\ninformation. The object of such collection, collation, authentication, and\ndissemination of financial information of debtors is to facilitate quick\ndecision making in the resolution proceedings.<\/p>\n\n\n\n Information utility is registered under Section 210<\/strong> of the Insolvency and Bankruptcy Code (IBC), 2016. It is governed and regulated by the Insolvency and Bankruptcy Board of India.<\/p>\n\n\n\n IBC\nstands for Insolvency and Bankruptcy Code. IBC is a law that looks to\nconsolidate the existing framework by making a uniform code for insolvency and\nBankruptcy. Insolvency and Bankruptcy Code was implemented through an act of\nparliament. The law was initiated due to a large number of non-performing loans\nof banks and sluggishness in debt resolution. The code received the assent of\nthe President on May 28th<\/sup> 2016.<\/p>\n\n\n\n The\nobject of the IBC is to ensure smooth and economically viable resolution for\nresolving insolvencies. It aims to protect the interests of small investors.\nIBC helps in improving the ease of doing business.<\/p>\n\n\n\n The various kinds of information\nstored under information utilities are listed below<\/strong>:<\/p>\n\n\n\n According to section 215(2) of the IBC 2016<\/strong>, 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.<\/p>\n\n\n\n The operational creditor can also submit financial information to the IU according to section 215(3) of the IBC<\/strong>. An operational creditor is someone who is the supplier of goods and services to a firm or a company.<\/p>\n\n\n\n Insolvency professional, regarding any insolvency, resolution, liquidation or bankruptcy proceedings, may also submit information to the Information utility under regulation 38(1)<\/strong>. <\/p>\n\n\n\n There are a number of\nresponsibilities that an information utility (IU) must perform to ensure the\nauthenticity of the information<\/strong>. These are enumerated below:<\/p>\n\n\n\n Also, Read:<\/b> NBFC<\/a>’s To Submit Financial Information with NeSL – RBI’s First IU under IBC<\/a><\/mark>.<\/p><\/div>\n\n\n\n A set of steps must be followed in\norder to submit the information to the IU.<\/strong> The procedure followed to submit\ninformation to the IU is as follows:<\/p>\n\n\n\n Step-1<\/strong><\/p>\n\n\n\n The\ninformation to be submitted must be submitted in Form C under regulation 20 of\nIBBI regulations, 2017.<\/p>\n\n\n\n Step-2<\/strong><\/p>\n\n\n\n The\ninformation that is received is forwarded for authentication.<\/p>\n\n\n\n Step-3<\/strong><\/p>\n\n\n\n The\nNational e-governance Services Limited (NeSL), after the receipt of the information,\nwill assign a unique identifier to the information and shall notify the user\nabout the unique identifier, the terms and conditions of authentication and\nverification of the information. It shall also notify about the consent\nframework for allowing the third parties to have access to the information.<\/p>\n\n\n\n Step-4<\/strong><\/p>\n\n\n\n Then\nthe user may authenticate or can disagree with all or part of the information\nwithin the prescribed time period. The time period shall be prescribed by the\nNeSL.<\/p>\n\n\n\n Step-5<\/strong><\/p>\n\n\n\n The\nstatus of the authentication shall be sent to the one who submitted the\ninformation.<\/p>\n\n\n\n Step-6<\/strong><\/p>\n\n\n\n Thereafter,\nthe person who authorises the information must affix his digital signature or\nthe Aadhar based e-sign whenever the information is put up on the platform.<\/p>\n\n\n\n Step-7<\/strong><\/p>\n\n\n\n Eventually,\nthe NeSL will verify the identity of the authenticator and the NeSL shall have\nno further responsibility in case the information of the submitter is either\nnot authenticated or disputed. <\/p>\n\n\n\n In\norder to ensure a greater degree of credibility of IU, the following points\nmust be kept in mind:<\/p>\n\n\n\n As\nthis tool provides financial information’s and various other providences, it\nalso faces certain challenges and concerns. \nAmong all the challenges, the real challenge is receiving authentication\nfrom the other party. Authentication is an essential ingredient for its success.\nInformation will be like evidence only when the authentication of the\ninformation is achieved due to the sensitivity of the information or resistance\nin sharing information. The other party\nin this context includes the financial creditors, operational creditors and\ncorporate debtors. Getting information from these could pose a challenge\nconsidering there might be resistance in sharing the information.<\/p>\n\n\n\n The\nissue of privacy of data is another debatable concern hounding this service.\nAlthough there is a risk management framework approved by the board of National\ne-governance Services Limited that deals with the security and the integrity of\nthe system and information at the same time. It will take care of the procedure\nto recover the information in case there is any unforeseen disaster, whether man-made\nor natural. However, the data stored in the digital database is still not\nimmune to data theft and piracy. A more effective and well-equipped security\nsystem would be appreciated by the masses. It would deter unwanted and\nunauthorised access to vital information. The data that the IU contains is\nhighly sensitive; therefore, a foolproof security system must be used to thwart\nthe advances of the violators.<\/p>\n\n\n\n The\norigin of the Information Utility is without any doubt a great initiative in these\ntimes. Access to the information makes it even more productive. It definitely\nprovides the stakeholders with a platform to make a little more conscious\ndecisions. It provides lenders and creditors with all the necessary information\nabout the insolvency resolution procedure.<\/p>\n\n\n\n Lack\nof information has been the greatest hindrance to an effective resolution. The\ncreation of this tool would help in avoiding this hindrance, thereby leading to\neffective resolution. It would make the process much better and NeSL being the\nonly Information Utility in the country would hopefully fulfil the need for\naccount aggregation by ensuring a reliable storage and information source. One\nof the important aspects is that the wealth of information will be stored in a\ncentral server located in India, which will be regulated and governed by the\nIndian rules and regulations.<\/p>\n\n\n\nAbout NeSL<\/h2>\n\n\n\n
What is meant by Information Utility?<\/h2>\n\n\n\n
What is IBC?<\/h2>\n\n\n\n
Types of information under Information Utilities<\/h2>\n\n\n\n
Who is eligible to submit the information?<\/h2>\n\n\n\n
What are the responsibilities of a registered Information\nUtility?<\/h3>\n\n\n\n
What is the procedure for submitting the information to\nthe Information Utility (IU)?<\/h2>\n\n\n\n
Things to be kept in mind<\/h3>\n\n\n\n
Challenges and Concerns<\/h3>\n\n\n\n
Conclusion <\/h3>\n\n\n\n