PAN card now valid for identity verification by information utilities
New Delhi, Jan 29, 2025 | 3:59 PM IST
IBBI has introduced the provision of 'deemed authentication' for debts reported as defaulted when there is no response from the debtor after three reminders
The PAN card has been included on par with other officially valid documents for use by information utilities, one of the pillars of the Insolvency and Bankruptcy Code, to verify the identity of users, according to the amended technical guidelines issued by the insolvency regulator on Wednesday. Information utilities store financial information about debtors in an electronic database, eliminate information asymmetry, and reduce delays and disputes in insolvency proceedings.
The amended guidelines issued by the Insolvency and Bankruptcy Board of India (IBBI) require the information utility to obtain a sub-authentication user agency licence from the Unique Identification Authority of India (UIDAI) for demographic authentication of users during the registration process.
“The original guidelines were quite elaborate as a 45-page document. The amendments were, however, necessary to streamline the process and 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 clarified,” Jyoti Prakash Gadia, managing director at Resurgent India, a merchant banking firm, said.
IBBI has introduced the provision of 'deemed authentication' for debts reported as defaulted when there is no response from the debtor after three reminders.
“This specific insertion is important for debtors to consider in order 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 a ground during the adjudication of applications before the National Company Law Tribunal (NCLT) by creditors. If disputed, this can be taken as a defence by the debtor, especially in the case of an operational creditor's application,” Daizy Chawla, managing partner, S&A Law Offices, said.
As of now, National E-Governance Services Limited (NeSL), promoted by banks and insurance companies, is the only information utility registered with the IBBI. Most institutional financial creditors submit financial information to it.
An information utility is mandated to provide core services such as accepting electronic submissions of financial information, ensuring its safe and accurate recording, as well as authentication and verification. It also provides access to stored information for specified persons.
The financial information it stores includes a person's debts and instances of default, liabilities when the person is solvent, records of assets over which security interest has been created, and their balance sheet and cash flow statements.
[The Business Standard]
