Centre mulls system for early...

BESIDES, IT ALSO generates warnings by providing alerts for missed EMIs, overdue payments and other red-flags.

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But despite its strong framework, there are some limitations in NeSL's system that makes it less effective in early identification of insolvency.

"NeSL's strength is in serving as a neutral, legally enforceable repository of debt defaults and triggering alerts to creditors. But it is inherently dependent on external reporting and debtor authentication, so its efficacy is limited by data latency and coverage gaps," the official said.

On its part, the MCA monitors legal and statutory compliance of companies (filings, disclosures, etc). Because many of the corporate failures or defaults are preceded by compliance lapses, the new EWA will be equipped to detect warning signals - such as failure to file statutory reports - earlier in the chain of distress.