It’s a no bummer that every sector in the economy is undergoing digital transformation. And speaking of the most dominant, ever-evolving, and highly sensitive industries; BFSI – Banking, Financial Services, and Insurance, Real Estate and many more, digital transformation can go a long way to improve and transform its tedious processes. A vision that all organizations have in common is to eliminate paper from their operational procedures. This strategy can, without a doubt, quicken the digital revolution.
And to name the hero of this digital revolution, electronic signature for signing the documents is a groundbreaking technology which can highly accelerate the growth and speed of processes.
The latest Indian IT Act amendments allows various industries to leverage e-signature technology to the fullest potential, in their benefits.
The Amendment to the IT Act
The Ministry of Electronics and Information Technology (IT) has come up with a notification dated 26th September 2022, subsequently published in the Official Gazette dated 04th October 2022 and has amended the first schedule provision of the IT Act 2000 listed in sub-section 4 of Section 1.
In the first schedule of the IT Act, the documents or transactions to which the Act doesn’t apply and were a part of the negative list are as follows:
- A negotiable instrument (other than a cheque) as defined in section 13 of the Negotiable Instruments Act, 1881 (26 of 1881)
- A power-of-attorney as defined in section 1A of the Powers-of-Attorney Act, 1882 (7 of 1882)
- A trust as defined in section 3 of the Indian Trust Act, 1882 (2 of 1882).
- A will as defined in clause (h) of section 2 of the Indian Succession Act, 1925 (39 of 1925), including any other testamentary disposition by whatever name called
- Any contract for the sale or conveyance of immovable property or any interest in such property
The new IT Act amendments negated/deleted few of the provisions from the above list and redefined them in the favour of technology by allowing electronic signature use.
Let’s have a broader look into how the new provisions differ from the earlier mentioned ones and evaluate the amendments.
|Negotiable Instruments couldn’t be signed electronically||A cheque, a Demand Promissory Note or a Bill of Exchange issued in favour of or endorsed by an entity regulated by the Reserve Bank of India, National Housing Bank, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India and Pension Fund Regulatory and Development Authority|
|A power-of-attorney (POA) couldn’t be signed electronically||Those power-of-attorney that empower an entity regulated by the Reserve Bank of India, National Housing Bank, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India and Pension Fund Regulatory and Development Authority to act for, on behalf of, and in the name of the person executing them, can be signed electronically|
|A trust as defined in section 3 of the Indian Trusts Act, 1882||Remains same|
|Clause (h) of section 2 of the Indian Succession Act, 1925||Remains same|
|Any contract for the sale or conveyance of immovable property or any interest in such property||Deleted/Removed. This means these documents can be signed electronically|
What does this amendment mean?
- Provisions for Negotiable Instruments:
The negotiable instruments viz legal documents such as cheques, Demand promissory notes (DPN) and Bill of Exchange which are issued to or endorsed by any Bank/FI/National Housing bank/SEBI intermediaries like Mutual Fund houses, Stock Broker, etc/IRDA approved Insurance Companies/Pension Fund regulatory and development authorities of India are now open to the applicability of electronic signature.
Which simply means that DPNs and/or Bill of Exchange can now be digitally signed via eSignatures and stamped without any limitations as it will be considered 100% legal and authenticated for any transactions across companies.
- Provisions for Power of Attorney:
As per the amendment, the power of attorney (POA) that empowers any Bank/FI/SEBI Intermediaries/Insurance companies/Pension Fund regulator can be signed using eSignature. But also note that, this does not include the general power of attorney that is used widely by the public at large.
Simply, POAs can now be signed and stamped with electronic signatures and will hold legitimate value for all transactions across regulators.
- Provisions for documentation of Immovable Properties:
Last but the foremost because by far the biggest change that the amendment has brought in has to be this one. Real Estate or Banking documents that was involved in the Lease/Sale of Immovable Properties wasn’t considered for signing with e-signature. But after the amendment is effective, all the documents including (but not limited to) the Sale deed/Conveyance/Lease Deed (of any duration) can be executed digitally with e-signing. The big news from the amendment is for the contracts for immovable properties because now they are fully involved in the IT Act and can be permissibly signed with e-Signature.
The Way Forward
This amendment not only allows electronic signing of documents but also supports the growth of e-Signature for the Indian companies and boost them to hop on the path of digital transformation journey and speedup their operational processes.
Cygnature’s blockchain e-Signing solution is leveraged by various industries to expedite their documentation procedure. We at Cygnature, are currently working with companies from several industries to eSign documents.
For quick disbursement of DPNs, Bills of Exchange, POAs and other documents, we provide Bulk Signing, Live Signing, and e-Stamping features over our blockchain e-signing platform where you can invite numerous signers to digitally sign the documents, seamlessly and effectively.
Book a free demo now to cut your signature cycles and get approvals faster!