[Mahim Raval is a 3rd year B.Sc., LL.B. (Hons.) student at Gujarat National Law University in Gandhinagar] India’s financial landscape has been grappling with the persistent burden of stressed assets, hampering the flow of credit and impacting economic growth. While the Reserve Bank of India (“RBI”) has introduced multiple schemes to resolve the burgeoning non-performing assets of banks, the...
Inside SEBI’s Consultation Paper: Reshaping SSFs in Indian Finance
[Harsh Mittal and Sidhanth M K Majoo are 3rd year B.B.A. LL.B. (Hons.) students at National Law University, Odisha] The Indian financial system has long been burdened by the prevalence of stressed assets, necessitating substantial capital infusions into banks, non-banking financial companies (“NBFCs”), and other financial institutions. These stressed assets have constrained the ability of...
RBI’s Draft Directions on Wilful Defaulters: Implications and Concerns
[Aamir Kapadia and Tejas Venkatesh are penultimate year BBA L.L.B. (Hons.) students at Jindal Global Law School] On September 21, 2023, the Reserve Bank of India (“RBI”) released the Draft Master Direction on treatment of Wilful Defaulters and Large Defaulters. The purpose behind the draft is to solicit public comments on proposed regulations to tighten the norms applicable to wilful defaulters...
A Bank’s Post-Merger Liability for Pre-Merger Crimes
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...
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...
Put Options: Putting Up with Foreign Exchange Regulation
[Ryan Joseph is a 3rd year B.B.A., LL.B. (Hons.) student at Jindal Global Law School] A decision of the Madras High Court in January this year in GPE (India) Limited v. Twarit Consultancy has added to the controversial debate over the enforcement of put options that guarantee assured returns. The High Court toed the line with other courts and upheld an arbitral award, notwithstanding the...
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...
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...
Relaxation for Flip Structures under the New Overseas Investment Regime
[Shubh Gautam is a fourth year B.A.LL.B (Hons) student at Chanakya National Law University, Patna] Indian startups and new age companies are jumping on the bandwagon of ‘flipping’ their business. This trend has been addressed by the Foreign Exchange Management (Overseas Investment) Rules, 2022 issued on August 22, 2022 (forming a part of the new overseas investment regime). The new overseas...
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