IBBI Strengthens Insolvency Law with New Information Utility Rules

New Delhi, Jan 30 (PTI) Stricter norms have been put in place for information utilities under the insolvency law to enhance identity verification and streamline the authentication process for financial default records.

The Insolvency and Bankruptcy Board of India (IBBI) has amended the guidelines for technical standards governing information utilities, which acts as a repository of financial records related to insolvency proceedings.

Amending the guidelines, IBBI on Wednesday said the changes streamline the filing and verification of financial default records by introducing stronger user authentication procedures.

"For establishing user's identity during user registration process, IU (Information Utilities) to make use of the facility of demographic authentication of user from UIDAI database. For this purpose, IU shall obtain a Sub - Authentication User Agency (AUA) license from UIDAI," it added.

Further, to enhance data integrity, the framework mandates the use of a Permanent Account Number (PAN) or any other officially valid document (OVD) verified by the issuing authority for user identity verification.

Additionally, the amendments refine the process of submitting supporting documents related to financial defaults. The submitters will now be allowed to file documents separately from form C data submission, provided they adhere to digital security requirements, including electronic signatures and unique document identifiers.

Form C data submission is the process of reporting a debtor's financial details to an IU as per IBBI norms. It records loans, security interests, and defaults for insolvency proceedings under the Insolvency and Bankruptcy Code (IBC).

The amendments also clarified procedures for submitting default information before initiating insolvency resolution process under the IBC rules. The submitter will be required to first file default information with an IU, which will then issue a record of default in accordance with regulation 21.

Regulation 21 of the IU rules pertains to verification of default information received from creditors by an information utility, which then seeks confirmation from the debtor and informs related parties.

Additionally, IUs must preserve and track authentication e-mails sent to debtors, including details such as recipient e-mail addresses, delivery status, and time stamp generated by the system as per rules.

Further, such details will be stored in the database, ensuring a comprehensive record of default communication.

These changes will strengthen the insolvency resolution process by ensuring more accurate and verifiable information in the ecosystem, reducing disputes and enhance trust in the information utility framework.