Finally, a tech-savvy ministry

How many times have you heard people say that the Indian government is miles behind other countries when it comes to automation of processes? How many times have you heard them praise the electronic paper-less database systems that are used abroad? How many times have you heard the same people crib about how the information with the government just isn't accessible to the common man?

As of September, 2006, the ministry of corporate affairs had implemented its electronic database, in collaboration with TCS, on all registered companies in the country. This database, titled MCA21, has electronic records on every one of the over 820,000 companies registered across the country. I recently had the opportunity to meet the Joint Secretary at the ministry, Y S Malik, and the system administrator of MCA21, Dr Saini and also using MCA21. I was surprised to find that it was as good as its promoters claim it is.

As of now, every company registered in India has to make filings only electronically. All documents are filed with digital security certificates. You can now track the status of any eForm that has been submitted as well the status of your payments to the ministry. The database also allows you to apply for certified copies of the documents.

The best part of MCA21 is that it is not maintained and run only by the ministry for its internal purposes. This database is available on the Internet for public access! All documents are publicly accessible and are available for public inspection. You can use the website to find the CIN (Company Identification Number), which is a unique identification number for every company registered in India. Investor grievances can also be made using the system.

While MCA21 is still in its beta stage, the ministry is currently back-dating the database so that it will soon have every document filed by any company in India. What this means is that MCA21 will have every statutory document such as the annual report that is filed by a company as well as all event-based documents such as the appointing of a new director.

Malik and Saini have told me that the ministry is also working hard at increasing awareness among people about MCA21. They have set up "Facilitation Centres" in over 20 major cities in the country where people can be trained on how to use the system, free of charge. Some documents can only be accessed after paying a processing fee of Rs 50 per company which can be paid online using your credit card. This amount is a fraction of the amount one would spend in going to the regional Registrar of Companies (RoC) where the company that you are looking for information on is registered. They also tell me that after the system came online, the workload on the RoCs across the countries has reduced.

They have introduced the concept of Straight Put Through Forms which are purely procedural documents that do not require any vetting by an RoC. There are totally 16 forms that are Straight Put Through Forms and they account for almost 90 per cent of all forms that used to go through RoCs before the system came up. With the removal of the burden, the RoCs can now concentrate on the more important task of regulating.

As with any system, MCA21 also has room for improvement. Firstly, the data is currently being verified to check correctness and authenticity. Secondly, it is still not completely backdated. Thirdly, it does not work on Mozilla. Fourth, it could have been better structured. For example, it contains the annual returns documents, which have in them the names and shareholding of all shareholders of the company. This data should be put into the database as separate entries so that a person does not have to scan the entire documents to find this information. If one wanted to perform a search to see how many companies have, say, Dalit Directors, then each annual return of each company would have to be manually scanned.

Fifth, the public cannot yet make intelligent searches using the CIN. Each CIN is coded to indicate whether the company is listed or not; what its primary field of activity is; which state it was registered in; whether it is a PTC or a PLC; its year of incorporation; and finally, a unique ID. A search based on any of these criteria would not be very difficult to code since it would only be a search of the CINs to find those that match.

Finally, there is no provision that has been made for bulk searches that an NGO, academic institution or a private equity firm might do. If data on, say, the activity and year of incorporation of every company were to be done, it would cost Rs 410 million.

Regardless of these shortcomings, I think this is definitely a step in the right direction. MCA21 increases the efficiency of the government agency. It is the perfect model for the implementation of a transparent and secure electronic solution in a transaction-intensive, high-discretion system. It has successfully brought down costs and time per transaction. More than being just another example of a government agency jumping on the computerisation bandwagon, the ministry has implemented a carefully thought out system that effectively uses the advantages of an electronic system to improve information symmetry and speed.

I foresee this system having a huge impact on the Indian capital markets if implemented properly. This database can now give a prospective investor a much better idea about the company that he might invest in. It will be especially useful in companies that are just about to go public. This is the blueprint that should be mimicked by other governmental authorities for automating their systems. A public-private partnership with a private player that has core competency in IT solutions and developing the system with oversight and planning provided by the governmental agency, is the answer.