In October 2022, the Ministry of Electronics and Information Technology amended the First Schedule of the Information Technology Act, 2000 ('’First Schedule Amendment'’)
The First Schedule Amendment paves the way for digitisation of DPNs, Powers-of-Attorney and Immovable Property Contracts - a major shot in the arm for key BFSI industries.
This is probably the most consequential IT Act Amendment since the introduction of Aadhaar eSign in 2015.
Is this amendment relevant to me?
If your organisation is an entity regulated by RBI, NHB, SEBI, IRDAI or PFRDA, OR handles/deals in contracts related to immovable property, then this amendment is very relevant for you.
What is the First Schedule of the IT Act?
The First Schedule of the IT Act is a list of different types of documents and transactions. According to Section 1(4) of the IT Act, “Nothing in this Act shall apply to documents or transactions specified in the First Schedule”.
What exact change has been introduced by the First Schedule Amendment?
The amendment has removed DPNs, Bills of Exchange (issued in favour of RBI/NHB/SEBI/IRDAI/PFRDA regulated entities), Powers-of-Attorney empowering such entities, and Contracts for the sale or conveyance of immovable property from the First Schedule. These documents can now be digitally signed and stamped.
Why is the First Schedule Amendment so significant?
For the first time - BFSI verticals like secured lending, construction/housing finance, gold loans, wealth advisory etc. can digitize 100% of their paperwork and offer 100% digital products.
But doesn’t a Power of Attorney need to be notarised?
Under law, there is actually no requirement for a Power of Attorney to be notarised.
The reason why notarisation of PoAs has become common practice is because of the favourable presumption granted to notarised PoAs under Section 85 of the Indian Evidence Act, 1872.
Electronic signatures confer GREATER legal benefits on PoAs than notarization. With Section 85A, 85B(2) and 67A of the Evidence Act, eSigned PoAs enjoy strong presumptions of validity.
Can Leegality help me take advantage of the First Schedule Amendment?
Yes. Leegality Document Infrastructure helps Indian organisations digitise paperwork processes in a fast, easy and compliant way. Book a call with us to discuss your use case.