Information Utilities can use PAN card to verify users registering debt

IBBI has introduced the provision of 'deemed authentication' for debts reported as defaulted when there is no response from the debtor after three reminders

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Information Utilities (IU), which store credit information to provide high-quality, authenticated information about debts and defaults, can now use PAN card to verify the identity of users, according to the amended technical guidelines issued by the insolvency regulator on Wednesday. 

 

PAN card has been included in the list of officially valid documents which can be used by IUs, one of the pillars of the Insolvency and Bankruptcy Code, to verify users. 

 

IUs were floated to cut down on delays and disputes in insolvency proceedings. As on date, National E-Governance Services Limited (NeSL), promoted by banks and insurance companies, is the only Information Utility or IU registered with the IBBI. Most of the institutional financial creditors are submitting financial information to it.

 

The amended guidelines, issued by the Insolvency and Bankruptcy Board of India, require the IU to obtain a Sub-Authentication User Agency license from the Unique Identification Authority of India (UIDAI) for demographic authentication of users during registration process.

 

“The original guidelines were quite elaborate by way of a 45-page document. The amendments were, however, necessary to streamline the process and to remove ambiguity. The steps involved in the information of default, record of default, and its verification and authentication by various sets of creditors and defaulters have been brought out with greater clarity,” Jyoti Prakash Gadia, Managing Director at Resurgent India, a merchant banking firm, said.

 

IBBI has brought in the provision of “deemed authentication” with respect to debts reported as defaulted, when there is no response from debtor after three reminders.

 

“This specific insertion is important to be kept in mind by the debtors to avoid any kind of deemed acceptance as defaulted debt. It is advisable that they dispute the same, since deemed authentication can be taken as ground during the adjudication of the applications before NCLT by creditors and if disputed this can be taken as defence by debtor especially in case of Operational Creditor Application,” Daizy Chawla, Managing Partner, S&A Law Offices said.

 

An IU is mandated to provide core services such as acceptance of electronic submission of financial information, its safe and accurate recording as well as authentication and verification. It also provides access to information stored with them to specified persons.

 

The financial information it stores includes debts of a person and instances of default, liabilities for when the person is solvent, records of assets of a person over which security interest has been created and their balance sheet and cash-flow statements.  

VERIFICATION BOOST  

IUs were floated to cut down on delays and disputes ininsolvency

proceedings 

 

Defaults will be considered authenticated if adebtor does not respond after three reminders 

 

IUs must obtain a Sub Authentication User Agency license for demographic authentication 

 

Amendments streamline default reporting and authentication