Section 216: Rights and Obligations of Persons Submitting Financial Information
Section 216 of the Insolvency and Bankruptcy Code, 2016 deals with the rights and obligations of a person who has submitted financial information to an information utility. It permits correction or updating of information and restricts further disclosure except as permitted under the applicable regulatory framework.
Meaning and purpose of Section 216
Information utilities are regulated repositories for financial information under the Insolvency and Bankruptcy Code, 2016. Section 216 operates in conjunction with Section 215, which governs submission and access to financial information. Once information has been submitted, Section 216 provides a mechanism for updating, modifying or rectifying errors and imposes an obligation concerning disclosure of that information.
Section 216(1): Updating, modifying or rectifying financial information
Section 216(1) provides that a person intending to update, modify or rectify errors in financial information submitted under Section 215 may apply to the information utility for that purpose, stating the reasons, in the manner and within the time specified under the applicable framework.
The provision therefore recognizes that financial information already submitted may require correction or revision. The applicant is required to state reasons for seeking the update, modification or rectification, and the request must comply with the prescribed procedure and timeline.
Section 216(2): Restriction on further disclosure
Section 216(2) provides that a person submitting financial information to an information utility shall not provide that information to another person except to the extent, in the circumstances and in the manner specified.
This restriction should be read with the statutory and regulatory framework governing information utilities, access to stored information, authentication and permitted use of financial information.
What is financial information?
The expression financial information is defined in Section 3(13) of the Insolvency and Bankruptcy Code, 2016. In relation to a person, it includes specified records concerning debt, liabilities when solvent, assets over which security interest has been created, instances of default, balance-sheet and cash-flow information, and such other information as may be specified.
What is an information utility?
An information utility is defined in Section 3(21) of the Code as a person registered with the Insolvency and Bankruptcy Board of India under Section 210. Information utilities perform functions prescribed by the Code and the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017.
Practical effect of Section 216
Section 216 helps maintain the accuracy and controlled use of financial information held by an information utility. A person who identifies an error or needs to update information should follow the process applicable to the information utility and provide reasons for the requested change. The provision should be read together with Sections 213 to 216 of the Code and the current IBBI Information Utilities Regulations.