Earlier this month, the Supreme Court in Religare Finvest Limited v. State of NCT of Delhi (2023INSC819) considered the question whether the transferee bank in a merger can be fastened with corporate criminal liability for offences committed by the officials of the transferor bank prior to a merger of the two entities. The Court answered in the negative given the specific facts and circumstances...
‘Enabling’ Provisions of PMLA: Casting a Net Too Wide?
[Bhamini Tanwani and Vanshika Manglani are fourth-year B.A. LL.B. (Hons.) students at Hidayatullah National Law University, Raipur] The High Court of Delhi (‘the Court’) in case of PayPal Payments Private Limited v. Financial Intelligence Unit Indiaheld that payment platform PayPal is included in the definition of ‘payment system operator’ under the Prevention of Money Laundering Act, 2002...
Fine-Tuning the FLDG Framework: Sectoral Caps Reflecting Default Rate Variations
[Ritvij Ratn Tiwari is a 3rd-year B.A., LL.B. (Hons.) student at the National Law School of India University, Bangalore.] In June 2023, the Reserve Bank of India (“RBI”) issued guidelines regulating the arrangements for sharing the losses arising from defaulted loans, popularly called default loss guarantee (“DLG”), between regulated entities (“REs”) and lending service providers (“LSPs”). These...
Securing Borrowers, Shielding Lenders: RBI’s Default Loss Guarantee Regulations
[RS Sanjanaa is a 3rd year BA LLB (Hons.) student at Symbiosis Law School, Pune] The Reserve Bank of India (RBI) has granted approval to and released guidelines (on June 8, 2023) on the much-contended topic of default loss guarantee (DLG). A DLG model according to this refers to the default loss cover provided to a bank or non-banking finance company (NBFC) by the fintech company that was the...
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...
Call for Papers: 3rd RGNUL-SAM Conclave on Emerging Trends in Banking & Finance in India, 2023
The Rajiv Gandhi National University of Law, Punjab (RGNUL) is an autonomous National Law University (NLU) established by the RGNUL Act (No. 12 of 2006) passed by the Legislature of the State of Punjab, under the second wave of reforms instituted by the Bar Council of India. Established in 2006, RGNUL has garnered a pan-India reputation as a stellar institution for legal research and education...
Bombay High Court’s ASREC Ruling: Form v. Substance in SARFAESI Proceedings
[Sharanya Shivaraman is an Advocate practicing in Mumbai and a graduate of ILS Law College, Pune] The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was enacted over two decades ago to facilitate loan recovery and the securitisation of financial assets of banks and financial institutions. Under the framework of the Act, section 13 is a key...
The Bombay High Court’s Yes Bank Judgement: Falling Short on Fairness
[Harsh Vardhan is a management consultant and Bhargavi Zaveri Shah a doctoral researcher at the Faculty of Law, National University of Singapore and an editor of IndiaCorpLaw Blog] Last week, the Bombay High Court set aside the Reserve Bank of India (RBI)-appointed administrator’s decision to write off the additional tier (AT1) bonds issued by Yes Bank in 2016 and 2017. In 2020, when a...
Asset Reconstruction Companies as Resolution Applicants: Revisiting the SARFAESI’s Limitations
[Arshit Kapoor and Srilagna Dash are 5th year B.B.A. LL.B. (Hons.) and 3rd year B.A. LL.B. (Hons.) students, respectively at National Law University Odisha, Cuttack] Asset Reconstruction Companies (“ARCs”) are financial institutions which reconstruct and securitise bad assets of banks and financial institutions. They are regulated by the Securitisation and Reconstruction of Financial Assets and...
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...
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