The Reserve Bank today asked banks and other financial institutions to share information about assets of creditors with information utilities registered under the insolvency law.
The Reserve Bank today asked banks and other financial institutions to share information about assets of creditors with information utilities registered under the insolvency law. The directive from the apex bank clears the air over sharing of information about creditors as required under the insolvency law as many banks reportedly had reservations in parting with such details. It also comes at a time when lenders are set to initiate insolvency proceedings against more than 20 borrowers in addition to over 10 cases where proceedings are underway. Information utilities store financial information to help establish defaults and verify claims expeditiously in order to complete transactions under the Insolvency and Bankruptcy Code (IBC) in a time-bound manner. “All financial creditors regulated by the Reserve Bank of India (RBI) are advised to adhere to the relevant provisions of IBC, 2016 and IBBI (IUs) Regulations, 2017 and immediately put in place appropriate systems and procedures to ensure compliance to the provisions of the Code and Regulations,” the central bank said in a letter.
The letter has been addressed to all scheduled commercial, small finance, local area and cooperative banks as well as non-banking financial institutions and all-India financial institutions. The Insolvency and Bankruptcy Board of India (IBBI) is implementing the Code and last week issued guidelines for technical standards to be followed by information utilities, including for consent framework in sharing details with third parties. As per the IBC provision, “a financial creditor shall submit financial information and information relating to assets in relation to which any security interest has been created, to an information utility in such form and manner as may be specified by regulations”, the letter said. So far, National E-Governance Services Ltd (NeSL) has been registered as an information utility by the IBBI. Operational from December last year, the Code provides for a market-determined and time-bound insolvency resolution process.