FAQ's

Frequently Ask Questions

FAQ's

Ans. An Information Utility is a professional organization (which is registered with IBBI under Section 210 of IBC, 2016 as per the eligibility criteria prescribed) that will collect financial information, get the same authenticated by other parties connected to the debt & store the same and provide access to the Resolution Professionals, Creditors and other stake holders in the Insolvency Resolution Process, so that all stake holders can make decisions based on the same information.

The New Law IBC,2016 consolidates the existing framework and creates a new institutional structure, by setting up of Information Utility Companies, which will store all the credit information of Corporates/entities/persons;  The Certificate & data furnished by IUs are accepted by NCLT/DRTs as legal evidence.

This IU set-up is expected to contribute significantly for reduction of NPAs in banking sector, as the code aims to resolve the insolvencies in a time bound manner.

Ans. the purpose of the act is to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, as a regulatory body for Insolvency and Bankruptcy law.

Ans: The information utilities shall act as a regulated information agency which shall accept, electronically record, get authentication, maintain and provide access to financial information to the persons as may be specified in the Regulations e.g., creditors, Adjudicating Authority and other persons having interest in the information.

Ans. IUs provide the core services and other services under IU Regulations in accordance with IBC Code. (Section 3(9)). “Core services” means services rendered by an information utility for-

a) Accept electronic submission of financial information.

b) Safe and accurate recording of financial information.

c) Authenticating and verifying the financial information submitted by a person.

d) Providing access to information stored with the information utility to persons as may be specified.

Ans. The obligations & functions are as under:

  1. Create and store information in a universally acceptable format
  2. Accept electronic submissions of financial information from persons who are under obligation to submit the financial information under sub section (1) of Section 215 of IBC, 2016, in such form and manner as may be specified by Regulations
  3. Accept in specified form and manner, electronic submission of financial information from persons who intend to submit such information
  4. Meet such minimum service quality standards as may be specified by the Regulations
  5. Get the information received from various persons authenticated by all concerned parties before storing such information
  6. Provide access to the financial information stored by it to any person who intends to access such information in such manner as may be specified by Regulations
  7. Publish such statistical information as may be specified by Regulations
  8. Have inter-operability with other information utilities

Ans: Yes, an Information Utility shall be registered with Insolvency and Bankruptcy Board of India (IBBI), as specified in IBC, 2016, to carry on business as an Information Utility and has to obtain a Certificate of Registration from IBBI.  The details of eligibility criteria etc., are furnished in Regulation 3 of Insolvency and Bankruptcy Board of India (Information Utilities) Regulations 2017.  They need to be complied with while applying for registration.

Ans.  As per Section 210 of IBC, 2016, the IBBI may order for suspension or cancellation of Certificate of Registration granted to an Information Utility, on certain grounds mentioned therein.

Ans. Yes, the IBBI Board requires every Information Utility to set up a Governing Board for ensuring that the Information Utility takes into account the objectives sought to be achieved by the Code.

Ans: A Creditor means any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree holder.

Ans: An Operational Creditor means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. They are suppliers of good or services to any company or operational debtor.

Ans. Financial creditor is any person to whom a financial debt is owned and includes a person to whom such debt has been legally assigned or transferred to. Operational creditor is any person to whom operational debt is owned and includes a person to whom such debt has been legally assigned or transferred to.

Ans. the corporate insolvency resolution process can be initiated against any debtor either by the Operational Creditor or Financial Creditor.

Ans. As per Section 8(1), on the occurrence of default, the operational creditor shall first send a demand notice and a copy of an invoice to the corporate debtor demanding payment of amount involved.

The corporate debtor shall within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned notify the operational creditor of the existence of a dispute if any, and record of the pendency of the suit or arbitration proceedings. He shall also provide the details of the repayment of unpaid operational debt in case the debt has or is being paid.

Ans. Section 3(13) defines the default as non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and not repaid by the debtor.

Ans. Demand Notice means a notice served by the operational creditor to the corporate debtor demanding repayment of the operational debt in respect of which the default has occurred.

Ans. It can be submitted in Form No.3 or a copy of an invoice attached with a notice in Form 4 as per Rule 5(1) of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016

Ans. As per Rule 5(2) of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, the demand notice or a copy of the invoice may be delivered to the corporate debtor at the registered office by hand, registered post or speed post with acknowledgement due or by electronic mail service to a whole time director or designated partner or key managerial personnel of the corporate debtor.

Ans. the information regarding all invoices lodged with the debtor can be submitted to the IU which when get authenticated by the debtor can be helpful to Operational Creditor who can fall back in case of default. When the same Operational Creditor is providing services / supply of goods to a particular Corporate Debtor involving multiple invoices, the Operational Creditor can submit consolidated data/ information / documents to an Information Utility.

Ans. If the demand is disputed and if such disput has been raised before the issuance of the notice, application shall not be admitted as the Adjudicating Authority is not empowered to go into the dispute. Thus, application can be admitted only if demand of the debt is undisputed.

Ans. No, the operational creditors do not have the right in the meeting of committee of creditors. However the directors, partners, and one representative of operational creditors may attend the meeting of committee of creditors.

Ans. As per Section 9(4) the operational creditor may propose a resolution professional to act as an IRP.

Ans: e-Stamping is an online electronic secured way of paying non-judicial stamp duty to the government. It is completely secured by a 256 SSL encryption and legally valid in India currently implemented in the Rajasthan and New Delhi.

Ans: eSign is an online electronic signature service that can facilitate an Aadhaar holder to digitally sign a document. An Aadhaar holder can now sign a document One Time Password authentication thus requiring no paper based application form or documents. It is completely secured by a 256 SSL encryption and legally valid in India.

Ans: Digital Documentation Execution consist of two processes a) e-Sign b) e-Stamping in which e-stamping is optional depending on availability in that particular state and the user’s discretion.

Ans: On an average the process of DDE can be completed in just 6 minutes.

Ans: The documents executed through DDE are downloaded immediately after the process is completed on the users system.

Ans: Yes, NeSL’s DDE is can be integrated the banks LMS.

Ans. The Operational Creditor along with the application shall furnish

A copy of the invoice demanding payment or demand notice delivered to the operational debtor.
An affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt A copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt Statement of Record as obtained from Information Utility.

Ans. As per Rule 6(1) and 6(2) of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, the operational creditor after expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment, shall make an application under section 9 of the code in Form 5, accompanied with documents, fee and records required as specified in Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. the operational creditor shall dispatch the said application by registered post or speed post to the registered office of the corporate debtor.

Ans. The Adjudicating Authority shall admit the application as per Section 9(5) of IBC Code 2016, within 14 days of the receipt of the application by operational creditor and communicate the same to both the operational creditor and operational debtor if,

If the application made as per Section 9(2) is complete There is no repayment of the unpaid operational debt the invoice or notice for payment to the corporate debtor has been delivered by the operational creditorNo notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility there is no disciplinary proceedings pending against the resolution professional proposed by the operational creditor.

Ans.  As per Section 210 of IBC, 2016, the IBBI may order for suspension or cancellation of Certificate of Registration granted to an Information Utility, on certain grounds mentioned therein.

Ans. Any person may submit financial information to the information utility or access the information from the information utility on payment of requisite fee in such form and manner as may be specified by IU Regulations.

Before submitting the financial information, the person/entity has to enroll itself as a “User” with the Information Utility by declaring its identity and producing the identity documents like- Aadhaar, PAN, CIN Number etc.  NeSL would be verifying the identity and only thereafter, User Registration will be done and User Id informed, by e-mail.  For Institutions like- Banks/FIs, a Super User would be created with a facility to create sub-users.  Details would be communicated to individual banks/FIs.

For further details on User Registration and Submission of Information, please refer to “Detailed guidelines on User Registration Form” published in NeSL’s Website.

As per Section 3 (23), the word “Person” includes-  an individual, a Hindu Undivided Family, a Company, a Trust, a Partnership, a Limited Liability Partnership; and any other entity established under a statute and includes a person resident outside India.

Ans.  Financial information in relation to a person, means, one or more of the following categories of information, namely

  1. Records of the debt of the person;
  2. Records of liabilities when the person is solvent;
  3. Records of assets of person over which security interest has been created;
  4. Records, if any, of instances of default by the person against any debt;
  5. Records of the balance sheet and cash flow statements of the person; and
  6. Such other information as may be specified.

Ans. Any party connected to a Debt viz., Creditor (Either Financial Creditor or Operational Creditor), Debtor (or his authorized representative like Auditor), Co-Applicant, Co-borrower, Guarantor, can furnish the information to an IU.

Ans. Yes.  Section 215(2) stipulates that Financial Creditor shall furnish the information on a debt to an Information Utility.  Similarly, the Operational Creditor is also required to furnish the information on an operational Debt to an IU.

Ans. It can be submitted in Form C – Data Input File Format prescribed &published by NeSL inits Web-site.

Ans. All debt information irrespective of its health can be submitted to the IU.  Accounts in Standard Assets category and before getting delinquent have greater chances of getting authenticated by the borrower, which the Creditor can fall back on in case of default.

Ans.   Ideally, the up-dation of information by financial creditor is preferred on weekly basis.  However periodicity of up-dation is left to the choice of individual banks, for the present.

Ans. All debt information irrespective of its health can be submitted to the IU. Accounts in Standard Assets category and before getting delinquent have greater chances of getting authenticated by the borrower, which the Creditor can fall back on in case of default.

Ans.  Section 3(13) defines the default as non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and not repaid by the debtor.

Ans. In cases where Insolvency Resolution Process has commenced, the Resolution Professional can submit the information on the proceedings of meetings, records etc., in a Debt Account to the Information Utility, for storing.  An IU is required to extend such a service.

Ans. On receipt of information submitted by a Registered User, an Information Utility shall assign a Unique Identifier to the information including records of debt, acknowledge the User and notify the User of Unique identifier to the Information (Debt), the terms and conditions of authentication/verification and the manner in which the information can be accessed by other parties.

Ans. An Information Utility in all cases shall enable the User (Registered as User) to view the data on which the information was last updated, the status of authentication/verification while providing access to information.

Yes.  This would help in qualitative service at cheaper cost/s.

Ans. Yes, a Registered User may submit the information to any Information Utility, once more than one Information Utility come into operation

Ans. Yes, the operational creditor may submit the information to any other Information Utility as per IBC.

Ans. An Information Utility shall provide every Registered User an annual statement of all information pertaining to that User, free of charge.

Ans.  Yes, a person may modify or update or rectify an error, in the financial information submitted to an Information Utility by stating reasons in the manner as may be prescribed in the Code/Regulations.

Ans. A User shall expeditiously update the information submitted by it to an Information Utility.  Further, a User shall expeditiously correct the information as soon as it finds it erroneous, stating reasons, if any.

Ans. The Adjudicating authority can reject the application and shall communicate the decision to operational creditor if
The application made under Section 9(2) is incomplete
there has been payment of the unpaid operational debt.
the creditor has not delivered the invoice or notice for payment to the corporate debtor.
Notice of dispute has been received by the operational creditor or there is a record of dispute
Any disciplinary proceeding is pending against any proposed resolution professional.

Ans. The Adjudicating Authority shall, before rejecting an application, gives a notice to the applicant to rectify the defect in his application within 7 days of the date of receipt of such notice.

Ans. As per the provisions of IBC, 2016 & IU Regulations, the financial information furnished by one of the parties connected to a debt needs to be verified & authenticated by all other parties connected to the debt by affixing their digital signature or Aadhar based e-signature.  NeSL would be storing the authenticated information with it, for providing access to the persons specified in the Act, during the Insolvency Resolution Process.

Ans. Yes.  All the parties connected to Debt need to electronically authenticate the information with an IU, in order to store the information.

Ans. Yes, the party authenticating the information is provided with an option to review and affix his remarks item-wise for the data, while authenticating the information furnished by an Information Utility.  Such disputed details would be referred back to financial creditor/banks for resolution.

Ans: 1. For Authentication of Debt Information i.e., in cases where default is not reported in a loan record:


a) For Financial Debt, if the information of debt is not authenticated by a Debtor and the specified time limit of 15 days for authentication, from the successful delivery of debt information from NeSL-IU is exceeded or if an updated submission of information on the same unique debt id is received from the Submitter, whichever is later, it would be treated as “Expired Authentication”.


b) For Operational Debt, if the information of debt is not authenticated by a Debtor and the specified time limit of 10 days, for authentication, from the successful delivery of information from NeSL-IU is exceeded, it would be treated as “Expired Authentication”.


2. For Authentication of Default Information i.e., in cases where default is reported in a loan record:

 

If the information of default is not responded (authenticated) by a Debtor, even after successful delivery of default intimation & three minders from NeSL-IU, both in Financial Debts as well as Operational debts, as per Regulation 21 of IBBI (U) Regulations, 2017, it shall be treated as “Deemed to be Authenticated”.

Ans.   For accessing information from an Information Utility, a person has to pay such fees and access/retrieve such information in such form and manner as has been specified in the Regulations.

The applicant is required to submit the prescribed request for retrieval of information. The format is published in NeSL’s Web-site.  On receiving the request, NeSL would verify his/her identity, his/her relationship to the debt and on being satisfied, would enable access to the connected debt information.

Ans. NeSL, as IU would enable access to the information stored with it, only to parties connected to Debt, Insolvency Resolution Professionals, Liquidators,  Adjudicating Authority and IBBI as per Regulation 23.

Ans. The NeSL would preserve the information stored with it for a period of 8 years from the date closure of debt or from the date of last update in a debt a/c.

Ans. If the operational creditor wilfully or knowingly concealed in an application under Section 9 the fact that the corporate debtor had notified him of the dispute in respect of the unpaid operational debt or the full and final repayment of the unpaid operational debt or has knowingly and wilfully authorized or permitted such concealment, such operational creditor or person shall be punishable with imprisonment for a term which shall not be less than one year but may extend to five years or with fine which shall not be less than one lakh rupees but may extend to one crore rupees or with both.

Ans.  Yes.  All necessary care is exercised by an IU, following the standard practices.

Ans.  The authenticated information stored with an IU is treated as a legal evidence in the Insolvency Resolution Process.  The authenticated information cannot be repudiated.  It helps in establishing the facts of borrowing and facts of default.   Therefore, this enables saving of time in Resolution Process before the Adjudicating Authority.

The purpose of this is to remove information asymmetry and dependency on the debtor’s management for critical information that is needed to swiftly resolve insolvency.

Ans.  Yes, the NeSL, as Information Utility, would be collecting the fee for extending its various services like-  User Registration, Submission of information, Authentication, Retrieval, Upload of documents / Documents holding fee, etc.  Its fee structure for various services would be furnished in its Website “nesl.co.in”

Ans. Any person not satisfied with the service offered by NeSL as an Information Utility may lodge his/her grievance in the Web-based Grievance Redressal Mechanism enabled in its website.  NeSL would resolve all such grievances in a time bound manner, within 7 working days and inform the Complainant by e mail.

In case the maker of the representation is not satisfied with the reply, he can escalate the matter to Grievances Redressal Committee of NeSL, which would be examined by the said Committee and resolution would be ensured in 10 working days.

Ans.  Any person aggrieved by the functioning of an Information Utility may file a complaint with IBBI.

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Disclaimer:

  • This document is prepared for education purpose only to the Users.
  • These FAQs are not the interpretation law; but provide only a simplistic explanation of terms / concepts related to Information Utilities under IBC, 2016.
  • For full particulars of laws governing the Information Utilities System, please refer to the relevant Acts, Regulations, Guidelines and Circulars appearing under the provisions of Insolvency & Bankruptcy Code, 2016.

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