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India Public Information Sector: National e-Governance Services Ltd (NeSL) Designated as Information Utility (IU)

The National e-Governance Services Ltd (NeSL) became India’s first information utility (IU) for bankruptcy cases under the Insolvency and Bankruptcy Code 2016. NeSL is owned by State Bank of India and Life Insurance Corporation Ltd., among others. Recently, the Insolvency and Bankruptcy Board of India (IBBI) eased ownership norms for setting up such utilities.

What is an information utility?

Information utility is an information network which would store financial data like borrowings, default and security interests among others of firms. The utility would specialise in procuring, maintaining and providing/supplying financial information to businesses, financial institutions, adjudicating authority, insolvency professionals and other relevant stake holders.

Why is it important? How useful is it?

The objective behind information utilities is to provide high-quality, authenticated information about debts and defaults, as per the report of the Working Group on Information Utility published by the Ministry of Corporate Affairs. 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. Moreover, the database and records maintained by them would help lenders in taking informed decisions about credit transactions. It would also make debtors cautious as credit information is available with the utility. More importantly, information available with the utility can be used as evidence in bankruptcy cases before the National Company Law Tribunal.

What are the rules governing these utilities?

Information utilities are governed by the Insolvency and Bankruptcy code 2016 and IBBI (Information Utilities) Regulations 2017. The Insolvency and Bankruptcy Board of India (IBBI) overseas aspects such as registration and cancellation of these entities, their shareholding and governance among others. Recently, IBBI eased norms 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.

Source: The Hindu

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