Timely receivables are pivotal for the financial healthiness of any organisation. Colloquially known as “rolling cash”, this inflow of money at regular intervals plays a determining role in an organisation’s financial capability to pay operating expenses like salaries, rent, utility bills, vendor payments, etc.
For Financial Creditors (Banks and NBFCs), the receivables are in the form of EMIs from borrowers and for Operational Creditors (individuals/entities that provide goods and/or services to other organisations), the receivables are in the form of client payments.
Delayed receivables often result in liquidity issues for organisations. This, in turn, can have a ripple effect of deferred or non-payment of the aforementioned operating expenses.
A host of arbitration mechanisms and legal forums exist to help creditors (Financial as well as Operational) recover unpaid dues from their debtors. Presenting irrefutable evidence(s) of debt is one of the most important determining factors in the speedier resolution of cases in such legal forums.
To ensure verified information of all debts/claims filed by creditors, National E-Governance Services Ltd. (NeSL) was incorporated as India’s first Information Utility (IU). Registered with the Insolvency and Bankruptcy Board of India (IBBI), NeSL provides verified information (that does not require any further authentication) about a debt/claim. The debt information obtained from NeSL IU is considered as irrefutable evidence of debt and is legally admissible in any arbitration forum across India.
Here is everything you should know about the evidence of debt available in NeSL’s IU.
Record of Default (RoD)
In the IU, the evidence of debt and its default is generated in the form of Record of Default (RoD) – a comprehensive report that contains detailed information of the default submitted by the creditor and its authentication status i.e. response received from the debtor. Here is how it works:
1. When a creditor uploads the debt details on NeSL’s IU portal, an automatic ‘Default Information Authentication Request’ is emailed to the debtor for authentication and verification of the information. The email address used for this correspondence is the one that is submitted by the creditor. If the creditor does not provide the debtor’s email address, NeSL IU obtains the same from the MCA-21 records of the Ministry of Corporate Affairs.
2. As per the procedures laid down in the IBBI Information Utility Regulations, 2017, NeSL IU automatically sends three reminders to the debtor to authenticate (accept or dispute) the creditor’s default claim. The delivery of each email is duly tracked in the IU’s backend software. For emails that fail to be delivered, NeSL IU sends the debtor a hard copy of the Default Notice through Registered Post.
3. If the debtor fails to respond to the ‘Default Information Authentication Request’ and the subsequent reminders, the authentication status in the IU is updated as “Deemed To Be Authenticated” by the debtor.
4. NeSL IU then automatically generates a ‘Record of Default’ (RoD) and triggers a ‘Default Alert’ that is circulated to all lenders of the defaulting debtor. Every creditor who has offered and uploaded on the IU, any form of credit to the defaulting debtor receives the ‘Default Alert’. This has the effect of informing the creditors about a default to some other creditor, a fact that each creditor may never have been informed directly by the debtor. This may impact the creditworthiness of the defaulting debtor.
The aggrieved creditor can use the ‘Record of Default’ document as a legal piece of evidence in any legal or arbitration forum that is empowered to admit or accept cases of overdue and unpaid debts.
NeSL’s RoD is an electronic form of evidence in the form of a paper document that can be used in any legal forum. It is digitally signed and accompanied by section 65B certificate issued by NeSL IU. Both these documents act as the legal evidence of a debt default. Furthermore, the default intimation or broadcast acts as an early warning to other Financial Creditors who have lent to the defaulting debtor.
With records of outstanding debts amounting to Rs. 79 lakh crores filed by Banks, NBFCs, Debenture Trustees, private Financial Creditors, etc., available with NeSL IU, the evidence of debt and default is now easily accessible by the entire community of creditors.
To know more about the evidence of debt default obtainable from NeSL IU, please call our Toll Free Number 1800 599 2345 or email us at firstname.lastname@example.org.