Insolvency And Bankruptcy Code: First information utility to be operational in 3 months
A one-stop shop for details on all financial transactions of lenders, information utilities under the insolvency and bankruptcy law are likely to be operational in next three months, a top official said.
These "unique" institutions -- governed by the Insolvency and Bankruptcy Code (IBC) -- would act as repository of information about lending and borrowing activities done by all financial institution.
"They will provide ready information for resolution professionals and courts like NCLT. It will help them save time as information would be readily available for expeditious clearance of cases," Insolvency and Bankruptcy Board of India (IBBI) Chairman M S Sahoo told PTI.
Having such institutions might also help fight against the bad loans menace amid the government empowering RBI to direct banks to initiate insolvency and bankruptcy proceedings against defaulters under the IBC.
Under the Insolvency and Bankruptcy Code (IBC), information utilities can have a maximum of 49% foreign holding and rules for setting up such entities are already in place.
"One company has applied for in-principal approval...And FDI beyond 49% is not allowed. Information utility company should become a reality in next two-three months," Sahoo said.
An information utility would be storehouse of financial information that helps establish defaults as well as verify claims expeditiously. Having such a system would facilitate completion of transactions under the Code in a time bound manner.
"It is going to be big IT-intensive system... We are looking at operationalising information utilities, an organisation that will give financial information like lending, borrowing all that is required in transaction," he said.
Emphasising that there is no parallel of this in the world, Sahoo said information utility would be set up by market and this would be something unique to India.
It would be a public company with a net worth of at least Rs 50 crore, among other requirements, and more than half the directors of its governing board should be independent.
Its promoters, directors, key managerial personnel and persons holding over 5% of its paid-up equity share capital or total voting power, would be considered as fit and proper persons.
Sahoo said utilities "constitute a key pillar of the insolvency and bankruptcy ecosystem, the other three being the Adjudicating Authority (National Company Law Tribunal and Debt Recovery Tribunal)".