To bring in transparency in the credit information ecosystem and ensure that both the lender and the borrower are privy to the same information, the Reserve Bank of India (RBI) has mandated all Financial Institutions (Banks as well as NBFCs) to register and upload all their loan records on NeSL IU as enshrined in Section 215 of the Insolvency and Bankruptcy Code (IBC), 2016.
The move was necessitated due to rising incidents of mismatches in the financial information provided by Financial Institutions of the debt (loan) records of their individual borrowers. National E-Governance Services Ltd. (NeSL) offers creditors diverse modes for submission of information on its Information Utility in order to make it technologically simple and convenient.
At the core of the services of IU lies the ‘debt authentication’ facility to individual borrowers of credit facilities like home loans, personal loans, vehicle loans, etc. With NeSL extending its ‘debt authentication’ facility to individual borrowers, now when a Financial Institution uploads its debt (loan) record on NeSL’s IU portal, an automatic ‘debt authentication request’ is sent to the borrower to either authenticate or dispute the information provided by the Financial Institution.
To authenticate the information, all that an individual borrower has to do is auto-register on NeSL IU as an ‘Individual User’ by validating an OTP sent on the contact details provided by the lender and view the loan information provided by the Financial Institution. If the information is correct, borrower can authenticate (approve) it, else dispute the same in case of any mismatches. NeSL IU then shares the disputed information with the concerned Financial Institution for rectification.
Authenticating financial information on NeSL IU offers several benefits to individual borrowers that were earlier not available. A few notable benefits are outlined below:
1. Non-repudiable Information
Since the primary role of NeSL IU is to act as a neutral platform for authentication of debt information with both parties verifying and digitally signing their acceptance or dispute. This makes it legally binding. Once a borrower authenticates its loan information on the IU portal, the Financial Institution cannot change the information (interest rate, service charges, sudden penal charges, etc.) at a later date.
Similarly, when a borrower closes its loan account by paying all the outstanding dues, the Financial Institution is obliged to update the same on NeSL IU. This information at any time can be used by the borrower for strengthening its creditworthiness with lenders.
2. Better Legal Credence
As NeSL is owned by the major banks of India and incorporated as a Union Government Company, the credit information stored in its IU portal, as governed by the law of IBC, 2016 has the highest legal credence. IU does not give a score but protects the information given by parties to a financial contract, which serves as evidence in any legal forum. This access to data for the borrower is assured and can be easily and instantly downloaded by themselves.
3. Cheaper Alternative
At just Rs. 10/- per download, the Credit Facility Report that shows details of your loan and security and defaults, if any, obtained by downloading from NeSL IU is very economical.
4. Anytime, Anywhere Access
Once registered with NeSL IU, an individual borrower can instantly access his up-to-date loan information through any mobile, desktop, laptop or tablet device.
To Sum It Up
Armed with NeSL’s ‘debt authentication’ facility, individual borrowers no longer have to experience opacity in or lack of access to their updated loan information as calculated by their lenders as it is now stored in NeSL IU.
With the non-repudiable nature of the information obtained from NeSL IU, individual borrowers can now fasten their digital signatures to their loan applications and stay assured that their credit information is accurate and always updated.
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