[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...
RBI Bans Loading of Prepaid Payment Instruments From Credit Lines
[Manasi Chandriani Shah is a Solicitor (B.I.L.S)] Fintech entities, wallet providers, and non-banking financial companies have been mandated to pull the chains on all existing arrangements to facilitate or extend loans through prepaid payment instruments (“PPI”), including cards and wallets. Extending a credit line through any PPI has been prohibited by the Reserve Bank of India (“RBI”). This ban...
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...
Analyzing the Fintech Implications of RBI’s Mandate for Interoperability
[Akshay Luhadia and Rohit Gupta are 3rd year B.A., LL.B. (Hons.) students at West Bengal National University of Juridical Sciences, Kolkata] On April 7, 2021, the Governor of the Reserve Bank of India (‘RBI’) announced significant changes in the policies regulating the operation of prepaid payment instruments (‘PPIs’) in India. According to the guidelines under the Payment and Settlement Systems...
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...
The Need to Recalibrate the Indian Approach towards Cryptocurrencies
[Santosh S is a III year student at Symbiosis Law School, Pune] Since their advent in global economic affairs, cryptocurrencies have consistently stirred controversy, fear and caution. Despite this, they have proliferated rapidly, causing some significant legal and policy considerations to arise. In tandem with this global trend, cryptocurrency trading saw an increased share in volume in India...
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...
Corporate Ownership in Private Banks: Setting the Cat among the Pigeons
[Pramod Rao is Group General Counsel, ICICI Bank. This post represents his personal views] With the release of the Reserve Bank of India’s (RBI) Report of the internal working group to review extant ownership guidelines and corporate structure for Indian private sector banks, several articles and commentaries have been published. What has attracted attention has been a...
Towards a Proportionate Regulatory Framework for Virtual Currencies
[Anshul Semwal is a 5th year B.A. LL.B. (Hons.) student at the National Law School of India University, Bangalore] On April 6, 2018, the Reserve Bank of India (‘RBI’), a staunch critic of virtual currencies (‘VCs’), issued a circular banning the trade of VCs. The ban was short-lived as, two years later, the Supreme Court quashed the circular on the ground of proportionality in Internet and Mobile...
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