Utility Of Information Utilities

The Insolvency and Bankruptcy Code (the Code) is seen as a welcoming step to address the problem of stressed assets for investors and lenders. A key mechanism which the Code envisages is the formation of Information Utilities (IU). IU would be the entities that would act as data repositories of financial information which would receive, authenticate, maintain and deliver financial information pertaining to a debtor with a view to facilitate the insolvency resolution process in a time bound manner.

Eligibility and Constitution

According to the Rule 3 of Insolvency and Bankruptcy Board of India (Information Utilities) Regulations 2017, a public company having a net worth of more that Rs 50 crore can apply to set up an IU. Ordinarily, no single person can hold more than 10% of the paid-up equity share capital of an IU¹. However, there are exceptions defined in case of Government Companies, Banks, Insurance Companies, Stock Exchanges and Public Financial Institutions.