Modi 3.0 legislative plan: Financial registry, composite insurance, IBC changes on 100-day agenda

Recently, Prime Minister Narendra Modi asked ministers to meet secretaries and other officials of their respective ministries to prepare the agenda for the first 100 days of the new government. (PTI Photo)

The Narendra Modi government, confident of being re-elected, has drawn up a busy legislative plan for its first 100 days, which include creation of a national financial information registry, and key amendments to the insurance and insolvency laws, official sources said.

The National Financial Information Registry (NFIR) Bill, which is ready for introduction in Parliament, seeks to provide a 360-degree information system that will be readily available to lending institutions to quicken the process and cost of credit.

NFIR will likely be jointly held by lenders. For individuals or enterprises which want a lower interest rate, the banks will ask for their consent to access data about their business volume, electricity consumed, GST paid, etc, from NFIR. If consent for data is not given, banks will likely ask for collateral and loans may also be costlier.

Similarly, crucial reforms in the insurance sector will also likely be pushed with the launch of composite insurance licence, differential minimum capital and captive insurance.

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Currently, the Insurance Act, 1938, and the regulations of the Insurance Regulatory Development Authority of India (IRDAI) do not allow composite licensing for an insurer to undertake life, general, or health insurance under one entity. Allowing composite licensing could provide further impetus to the insurance sector owing to its various benefits such as reduction of costs and compliance hassles for insurers. It can also offer customers more choice and value, such as a single policy that covers life, health, and savings.

To promote microinsurance that plays an important role in financial inclusion and poverty alleviation, lower capital requirement will likely be lowered than the mandated requirement of a minimum Rs 100 crore, for such players. The Bill to amend the Insurance Act and IRDAI Act is almost ready in consultation with stakeholders.

Besides, to further streamline insolvency law, the government will likely introduce a bill to amend the Insolvency and Bankruptcy Code (IBC) to introduce cross-border and group insolvency norms. It will also seek to remove the interim moratorium for personal guarantor assets as well as introduce project insolvency under a real estate and creditor-led resolution plan (CLRP).

Group insolvency refers to clubbing the assets and liabilities of all companies in a corporate group and undertaking resolution proceedings, before dealing with each firm.

Currently, the IBC has no instrument to restructure firms involving cross-border jurisdictions, and in the absence of a legislative framework, the cases involving the resolution of groups and any cross-border elements are decided by the National Company Law Tribunal on an ad-hoc basis.

A holistic legislative framework introducing these concepts would plug certain important gaps in the insolvency jurisprudence.

Recently, Prime Minister Narendra Modi asked ministers to meet secretaries and other officials of their respective ministries to prepare the agenda for the first 100 days of the new government. Cabinet Secretary Rajiv Gauba held a meeting with secretaries in this regard.