Section 216: Rights and Obligations of Persons Submitting Financial Information
Section 216 of the Insolvency and Bankruptcy Code, 2016 (IBC) deals with correcting information already submitted to an information utility and the statutory restrictions on further sharing that information. It should be read with Section 215 and the applicable IBBI regulations.
Section 216 - Statutory provision
216(1). A person who intends to update or modify or rectify errors in the financial information submitted under section 215, he may make an application to the information utility for such purpose stating reasons therefor, in such manner and within such time, as may be specified.
216(2). A person who submits financial information to an information utility shall not provide such information to any other person, except to such extent, under such circumstances, and in such manner, as may be specified.
The wording above reproduces the two subsections appearing in the original article. For authoritative statutory wording and amendments, consult the official legislation sources below.
What does Section 216 mean?
Section 216 establishes two distinct rules for persons who submit financial information to an information utility (IU). Subsection (1) provides a route to seek updates, modifications or correction of errors. Subsection (2) limits onward disclosure of submitted information, subject to the exceptions and procedures specified under the applicable legal framework.
What is an information utility?
An information utility is an entity registered with the Insolvency and Bankruptcy Board of India (IBBI) under the Code to provide core services involving financial information. Its role includes receiving, authenticating, maintaining and providing access to financial information in accordance with the Code and regulations. The definition of core services appears in Section 3(9), and financial information is defined in Section 3(13).
Section 216(1): Updating, modifying or rectifying information
A person who has submitted financial information under Section 215 may apply to the relevant information utility when the information needs to be updated, modified or corrected. The application must state the reasons for the requested change and follow the prescribed manner and applicable time requirements.
- Identify the record: Refer to the financial information previously submitted, including the relevant transaction or debt record.
- Explain the requested change: Specify whether the request concerns an update, modification or correction of an error.
- Give reasons and supporting material: Provide documents or particulars supporting the proposed change, as required by the information utility's applicable process.
- Follow the prescribed process: Submit the request through the channel and within the period, if any, prescribed under applicable regulations and procedures.
- Retain the acknowledgement: Keep records of the application and any response or status communicated by the information utility.
Section 216(2): Restriction on further disclosure
Under subsection (2), a person who submits financial information to an information utility must not provide that information to another person except to the extent, in the circumstances and in the manner specified under the applicable framework. The rule is qualified rather than an unconditional ban on all disclosures: whether a particular disclosure is permitted depends on the statutory and regulatory provisions governing it.
This provision should be read alongside the information utility's duties under Section 214, including requirements concerning authentication and access to stored information. It should not be interpreted as displacing other mandatory disclosure obligations without considering the relevant laws and any specified exceptions.
Related IBC provisions
- Section 3(9): Defines core services provided by information utilities.
- Section 3(13): Defines financial information for the purposes of the Code.
- Section 213: Addresses the provision of core services by information utilities.
- Section 214: Sets out the obligations of an information utility, including authentication, access and interoperability.
- Section 215: Governs submission of financial information and distinguishes obligations of financial and operational creditors.
- Section 216: Addresses correction of submitted information and restrictions on further sharing.
Official legal sources
- India Code - Central legislation database (search for the Insolvency and Bankruptcy Code, 2016).
- IBBI - Legal Framework (Code, rules, regulations and amendments).
- Insolvency and Bankruptcy Board of India (regulatory information and updates).
- The Insolvency and Bankruptcy Code, 2016 - overview.
Frequently asked questions
Can incorrect financial information submitted to an information utility be corrected?
Yes. Section 216(1) permits an application to update, modify or rectify errors, stating the reasons and following the applicable prescribed procedure.
Does Section 216 allow a person to change a record without verification?
No automatic right to an unverified change is stated in Section 216. Relevant authentication and procedural requirements must also be considered.
Can submitted financial information be shared with another person?
Section 216(2) restricts onward disclosure except as specified in the applicable legal framework. The permitted extent, circumstances and manner must be checked before disclosure.
Which provision requires financial creditors to submit financial information?
Section 215(2) addresses submission by financial creditors. Section 216 addresses subsequent correction and restrictions on disclosure.
Legal information only. Consult the current statutory text, notifications and applicable regulations for a specific case.