MCA May Share Data To Reduce Number Of Insolvency Cases

According to officials aware of the developments, the ministry has held initial discussions with the regulatory bodies informing them of the availability of data sets, which may well include real-time data of company records, structure of companies and transactions done by them, besides the number of people employed, board of directors and allied group companies.

“We have a lot of data and there’s data with other bodies such as NFRA, IBBI, which is sitting in silos. Our intent is that the data sets speak to each other so any agency has a comprehensive view of a company at any given time. We want to start with the MCA data," a senior official said, asking not to be named as the discussions were just beginning. He added that entities such as the NCLT could also use the data on a case-by-case basis when they want to look into a company for any particular case. “We have that ability and we can provide the data with ease," he said.

The NFRA is a legal watchdog for the auditing profession. It is responsible for setting accounting standards and improving the quality and consistency of financial statements. It has the power to investigate professional misconduct and impose penalties on chartered accountants. The aim is to ensure that businesses and financial institutions disclose accurate and fair information.

The IBBI is the regulator for overseeing insolvency proceedings. It writes and enforces rules for processes — namely, corporate insolvency resolution, corporate liquidation, individual insolvency resolution and individual bankruptcy — under the Insolvency and Bankruptcy Code.

Both the regulators have their own data bases, but could benefit from access to MCA data for cross-checking information. “If a particular company is undergoing insolvency, we will have data on it beginning from 2005, which are its sub-entities, related parties, members on the board and transactions done, besides the data they submit on quarterly basis," the official said.

The NCLT would be able to refer to this data to help in early resolution of cases. The MCA and the finance ministry did not respond to queries seeking comment.