{"id":34583,"date":"2018-10-31T12:04:03","date_gmt":"2018-10-31T06:34:03","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=34583"},"modified":"2018-10-31T12:04:03","modified_gmt":"2018-10-31T06:34:03","slug":"information-utility-under-the-ibc","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/information-utility-under-the-ibc\/","title":{"rendered":"Information utility under the IBC:\u00a0"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/todays-paper\/tp-business\/information-utility-under-the-ibc\/article19867924.ece\"><span style=\"font-weight: 400;\">Information utility under the IBC<\/span><\/a><span style=\"font-weight: 400;\">:\u00a0<\/span><\/p>\n<p><b>Context<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Recently<\/span><b> National e-Governance Services Ltd (NeSL)<\/b><span style=\"font-weight: 400;\"> became India\u2019s first information utility (IU) for bankruptcy cases under the Insolvency and Bankruptcy Code 2016.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> This registration is valid for<\/span><b> five years<\/b><span style=\"font-weight: 400;\"> from the date of registration.<\/span><\/li>\n<\/ul>\n<p><b>About NeSL<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">NESL is incorporated as a Union Government company and owned by leading public financial institutions. NESL is an information infrastructure institution dealing with critical financial information projects that aim at better serving the financial sector and its stakeholders, besides citizen-centric projects<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">NeSL is owned by State Bank of India and Life Insurance Corporation Ltd., among others<\/span><\/li>\n<\/ul>\n<p><b>OBJECTIVES of NeSL<\/b><\/p>\n<p><span style=\"font-weight: 400;\">National e-Governance Services Limited (NeSL) was incorporated to augment the Information Infrastructure of India with a focus on delivering services for the public, government and public financial institutions.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>Offer Digital Services<\/b><span style=\"font-weight: 400;\"> &#8212; To collaborate with banks and financial institutions to offer digital services to customers that cut across different institutions and create a win-win situation for both.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Optimizing Governance Services<\/b><span style=\"font-weight: 400;\"> &#8212; To undertake Projects at a national level for optimizing governance services to residents of India through digital modes, including in financial services.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Changes In Rural Economy<\/b><span style=\"font-weight: 400;\"> &#8212; To support India\u2019s Financial Inclusion Strategy to make significant changes in rural economy<\/span><\/li>\n<\/ul>\n<p><b>What is an information utility?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It is an information network which would <\/span><b>store financial data<\/b><span style=\"font-weight: 400;\"> like borrowings, default and security interests among others of firms. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The utility would specialise in <\/span><b>procuring, maintaining and providing\/supplying financial information to businesses, financial institutions, adjudicating authority, insolvency professionals<\/b><span style=\"font-weight: 400;\"> and other relevant stakeholders.<\/span><\/li>\n<\/ul>\n<p><b>Why is it important? <\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Information utilities is to provide high-quality, authenticated information about debts and defaults.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Information utilities are expected to play a key role as they allow storage of financial information of registered users and expeditiously process and verify information received.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The database and records maintained by them would help lenders in taking informed decisions about credit transactions. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It would also make debtors cautious as credit information is available with the utility. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Information available with the utility can be used as evidence in bankruptcy cases before the National Company Law Tribunal.<\/span><\/li>\n<\/ul>\n<p><b>What are the rules governing these utilities?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Information utilities are governed by<\/span><b> the Insolvency and Bankruptcy code 2016 and IBBI (Information Utilities) Regulations 2017<\/b><span style=\"font-weight: 400;\">. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The Insolvency and Bankruptcy Board of India (IBBI) overseas aspects such as <\/span><b>registration <\/b><span style=\"font-weight: 400;\">and <\/span><b>cancellation <\/b><span style=\"font-weight: 400;\">of these entities, their <\/span><b>shareholding <\/b><span style=\"font-weight: 400;\">and <\/span><b>governance <\/b><span style=\"font-weight: 400;\">among others.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Recently,<\/span><b> IBBI eased norms<\/b><span style=\"font-weight: 400;\"> for information utilities, allowing Indian firms listed on stock exchanges to hold 100% in such firms. It also allowed individuals to hold 51% in the utility for a period of three years.<\/span><\/li>\n<\/ul>\n<p><b>How will the utilities help stakeholders in the insolvency process?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>Financial creditors<\/b><span style=\"font-weight: 400;\"> (banks which provide loans to the company): It is mandatory for financial creditors to provide financial information to the information utility. <\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">When they initiate insolvency proceedings against the defaulting firm (known as corporate debtor), the utilities may help as they would act as a centralised platform for accessing data.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\"><b>Operational Creditor <\/b><span style=\"font-weight: 400;\">(Suppliers of goods and services to the firm in question): Unlike financial creditors, it is optional for the operational creditor to provide financial information to the utility. <\/span><\/li>\n<\/ul>\n<p><b>What are the key challenges for these utilities?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">While the onus is on financial creditors, operational creditors and corporate debtors to provide the required information,<\/span><b> procuring authentic information<\/b><span style=\"font-weight: 400;\"> might be a challenge due to the sensitivity involved. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There may also, be<\/span><b> resistance in sharing information<\/b><span style=\"font-weight: 400;\"> as it is optional for the operational creditor to provide financial information to the utility.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">There is also risk of exposure to <\/span><b>data piracy and data theft<\/b><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Information utility under the IBC:\u00a0 Context Recently National e-Governance Services Ltd (NeSL) became India\u2019s first information utility (IU) for bankruptcy cases under the Insolvency and Bankruptcy Code 2016. This registration is valid for five years from the date of registration. About NeSL NESL is incorporated as a Union Government company and owned by leading public&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/information-utility-under-the-ibc\/\">Continue reading <span class=\"screen-reader-text\">Information utility under the IBC:\u00a0<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-34583","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":249,"cached_at":""},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/34583","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=34583"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/34583\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=34583"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=34583"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=34583"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}