In a judgement pronounced earlier this month, the Bombay High Court re-emphasized the requirements of natural justice to be followed by banks when designating a borrower who has defaulted on debt as a ‘willful defaulter’. This judgement is in line with the jurisprudence laid down by the Supreme Court and multiple High Courts on banks declaring borrowers as ‘willful’ defaulters in exercise of the...
Open Questions on RBI’s Enforcement Actions in Indian Fintech
“God may be in the details, but the goddess is in the questions. Once we begin to ask them, there’s no turning back.” – Gloria Steinem Over the last month and a half, the enforcement actions of the Reserve Bank of India (RBI) with respect to Paytm and in relation to certain payment arrangements through corporate cards have raised substantive questions of law, facts and due process. This...
How Will Courts Decide in Bond Holders versus Central Banks?
[Bhargavi Zaveri Shah a doctoral researcher at the Faculty of Law, National University of Singapore and an editor of IndiaCorpLaw Blog and Harsh Vardhan is a management consultant] The Supreme Court is currently hearing an appeal against a Bombay High Court judgement on Yes Bank’s restructuring plan. The question at hand in this appeal is this: whether, as part of Yes Bank’s restructuring...
Supreme Court’s Note Ban Judgement: Does it Matter?
In a judgement delivered on 2 January 2023, the Supreme Court upheld the constitutionality of the demonetization exercise undertaken by the Government of India in November 2016. The judgement was delivered by a five-judge constitution bench, with one judge dissenting on all the questions decided by the majority. The lapse of six years since the demonetization exercise led to questions regarding...
How Securities Laws are Enforced in India: Some Facts from a New Data-set of SEBI Orders
As the regulator of one of the world’s largest stock markets by market capitalization, the Securities and Exchange Board of India (SEBI) has several enforcement tools at its disposal. These include imposing monetary penalties, cancelling licences of regulated intermediaries and pursuing criminal proceedings against violators of the laws, regulations and rules administered by SEBI. Moreover, the...
Use Cases of a Digital Rupee to the Average Household and Business in India
In her Budget Speech, the Finance Minister announced a proposal to issue a Digital Rupee by the Reserve Bank of India (RBI) starting financial year 2022-23. What functions might a Digital Rupee (synonymously, a central bank digital currency or CBDC) issued by the RBI, serve? Identifying the use-cases of a CBDC is critical to the design of the Digital Rupee, and the design of the infrastructure...
FIU’s Penalty on PayPal: Should Payment Gateways be Subject to Anti-Money Laundering Law?
Recently, the Financial Intelligence Unit (FIU) penalized PayPal to the tune of Rs. 9 million for not registering itself as a ‘payment system operator’ under the Prevention of Money Laundering Act, 2002 (PMLA), India’s anti-money laundering (AML) law. PayPal appealed against the FIU’s order before the Delhi High Court. In January 2021, the Court directed the Finance Ministry to constitute a...
FIU’s Penalty on PayPal: The Wisdom of Jurisprudence by Committee
Last week, the Supreme Court’s order constituting a committee to settle the ongoing farmer agitation was critiqued across the entire spectrum of left-to-right wing commentary. At about the same time, in a case involving PayPal, a popular online payment gateway service in India, the Delhi High Court passed an order directing the Finance Ministry to set up a committee to address the following...
Audio-Perspectives on Bankruptcy Law during the Pandemic
In times of acute financial distress, such as these, one might expect to see bankruptcy practitioners and scholars to be the busiest. Bankruptcy law is often used as a tool to mitigate and deal with the impact of financial distress. As financially distressed firms and creditors seek the refuge of the law for debt recovery and re-organisation, one is likely to see an uptick in bankruptcy cases and...
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