Transforming e-Governance

National e-Governance Services (NeSL) is India's leading repository of electronic financial records, providing secure and simplified operations in the financial ecosystem, contributing to the Indian economy's overall growth and stability. NeSL operates under the regulatory framework of the Insolvency and Bankruptcy Board of India (IBBI) and provides information verification, authentication, and storage services. It serves as the central depository for financial transaction records, including collateral and security interests, in order to improve transparency and efficiency in the lending and borrowing process.

Objectives To Abide By

Committed to fulfilling a number of important goals in the financial industry, one of the key objectives of NeSL is to accelerate time-bound resolution by giving creditors and adjudicating authorities certified information without the need for further verification. Additionally, NeSL assures that if a default is brought against a debtor, all creditors connected to that debtor are promptly notified. NeSL seeks to minimise information asymmetry between parties engaged in debt and encourage better credit monitoring by creditors. Moreover, NeSL strives to create a mutually agreed upon declaration of the outstanding balance between parties, which enhances the transparency and clarity of financial transactions. Harnessing information technology, NeSL works actively to assist all stakeholders in the ecosystem of the Insolvency and Bankruptcy Code by serving all aspects of the code.

Contribution To Digital Transformation

NeSL’s Digital Document Execution (DDE) facilitates digital and paperless contract execution including e-signing and e-stamping. It entails real-time procurement of stamp duty through arrangements with various state governments. All types of contracts including loan documents or even agreements for the supply of goods or services can be executed, subject to compliance with certain conditions. The parties to the contract can also execute the same from the comfort of their home, at any time of the day. The executed documents are stored in the NeSL repository; since these are digitally signed, they cannot be tampered with and can be easily accessed by an authorised person. This would mean easier payment of revenue to the government by way of stamp duty. The revenue loss to the government due to non-payment, evasion, or underpayment of stamp duty can be avoided. The government can also monitor the development activities in various regions from the number of contracts being executed in each region.

The advent of technology has increased access to information, decreased paperwork, and overall efficiency and effectiveness of government processes in addition to streamlining government operations.

Key Initiatives

NeSL has arrangements with 23 state governments for online and real-time procurement of stamp duty for execution of contracts including loan documents. Many state governments have permitted citizen services to be executed on the NeSL portal like the e-Udbhavam for Karnataka, e-Kaiyoppam for Tamil Nādu, and e-Suvidha for Orissa. For instance, a landlord based in Germany can execute a lease deed for his house with his tenant in Tamil Nadu using the e-Kaiyoppam platform of NeSL.

Moreover, NeSL has also launched an electronic bank guarantee in association with the Indian Banks’ Association. Several beneficiaries including government departments have started accepting the same in lieu of the traditional physical BGs, which not just take a long time to be issued and delivered to the beneficiary, but the authenticity of the same cannot be easily verified. NeSL’s e-BG is tamper-proof, available in digital form, and can easily be verified on the NeSL portal.

Its DDE is also available on the Jan Samarth portal for digital execution of documents under the credit-linked subsidy schemes of the government. It is used in various government schemes like PM Svanidhi.

Rapid Growth

The first e-BG was issued in September 2022 by HDFC and ICICI Bank. Since then 11 other banks including Axis, BoB, Federal, IOB, IDBI, IDFC, IndusInd, SBI, South Indian Bank, Yes Bank and others have been onboarded to issue e-BG and there are 7 banks in user acceptance testing (UAT) that will go live soon. As of June 05, 2023, 1,183 e-BGs have been issued in favour of 340 unique beneficiaries for a value of Rs 4,058 crore across 19 states.

Harnessing Technology

NeSL is a repository of data on debts and documents of the banking system. It alerts its users about defaults by their borrowers or their impending insolvency. If insolvency proceedings commence against a borrower, NeSL alerts its users about the same. Nonetheless, NeSL’s DDE uses fuzzy logic to identify the beneficiaries and to ensure that the documents are executed and disbursed to only the intended beneficiaries. This is useful in subsidy link credit schemes of the government where the beneficiaries often belong to underprivileged segments of society with no fixed employment or permanent dwelling.

Future of e-Governance

NeSL envisions itself as a living will for businesses, a repository for all contracts. This would facilitate due diligence for a potential acquisition either as an outcome of insolvency proceedings or through a process of M&A. The companies which have such a living would attract a higher valuation in the securities markets and be more attractive to investors of debt or equity capital.