IBBI’s New Guidelines for Information Utilities: Strengthening the Backbone of Insolvency Proceedings

Introduction

The Insolvency and Bankruptcy Board of India (IBBI) has issued a fresh set of guidelines aimed at improving the operations of Information Utilities (IUs) under the Insolvency and Bankruptcy Code (IBC). These reforms are designed to enhance identity verification, boost data integrity, and streamline the default recording process, all of which are essential for efficient and fair insolvency resolution.

📂 What Are Information Utilities (IUs)?

Information Utilities serve as trusted repositories of financial information relevant to insolvency cases. Their core responsibilities include:

• Recording of financial debts, defaults, and security interests
• Storing supporting documents and transaction history
• Enabling creditors, debtors, and insolvency professionals to access authenticated data

🧾 Their role is vital in maintaining transparency and efficiency during insolvency resolution.

🛠️ Key Amendments Introduced by IBBI

The updated technical standards focus on tightening verification and improving workflows:

✅ Mandatory Identity Verification

• All users (creditors, debtors, professionals) must verify identity via:
  • PAN card
  • Aadhaar-based authentication
• Data will be cross-verified with official databases to ensure accuracy and integrity

⏱️ Deemed Authentication of Defaults

• If a debtor does not respond to three reminders, the default is treated as “deemed authenticated”
• This helps prevent delays in resolution and encourages timely engagement from debtors

📤 Streamlined Default Submission Process

• Creditors must submit default information to an IU before initiating insolvency
• Steps for default recording and verification are now clearly laid out
• Supporting documents can be submitted at any time
• IUs will issue digitally stamped acknowledgments for added security

🧩 Improving Data Integrity: Colour-Coding and Demographic Checks

• A colour-coded status system shows:
  • Pending authentication
  • Disputed defaults
  • Deemed authenticated entries
• This visual aid allows all stakeholders to track verification status easily
• IUs will now authenticate user demographics using the UIDAI database, improving user credibility

⚠️ Implications for Debtors

Debtors must pay close attention to these changes:

• A non-response to default notices may lead to the automatic acceptance of the creditor’s claim
• Once authenticated (even deemed), the data can be used by creditors in insolvency tribunals
• Debtors are advised to contest defaults promptly to protect their legal rights

🧷 Proactive communication can prevent adverse judgments during insolvency applications.

Conclusion

The IBBI’s latest guidelines aim to build a more reliable, structured, and efficient ecosystem for insolvency resolution in India. With deemed authentication, stricter identity verification, and better data transparency, the role of Information Utilities is set to become even more critical. As India strengthens its IBC framework, these changes will help bring clarity and speed to financial dispute resolution.