Vijay Mallya, Nirav Modi, PNB Bank Fraud are the three things that
filled the newspapers, news channels and news-feeds for quite some time. In the
past few years, the instances of banking frauds have increased manifold and all
one could see in the newspapers was reports of banking frauds of thousands of
crore rupees primarily involving non-repayment of loans. What added fuel to the
fire was the fact that these defaulters left the country in order to evade their
responsibilities and left their motherland in a miserable state in terms of the
economic harm they caused.
These frauds not only harmed the economy of the country but also affected the
image of the country and its financial system not only among its citizens but
also throughout the world. People started blaming the legal system and the
government of India for its failure to prevent such scams. This called for
taking up of steps to deal with the issue at hand and thus Reserve Bank of India
(RBI) and the government came up with certain measures to check financial
institutions and their activities.
Certain laws have come up like Insolvency and Bankruptcy Code,2016 and
amendments in certain Acts like Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act,2002 (SARFAESI Act) providing
for a provision for three months jail in case borrower does not provide asset
details. However, the most important development to deal with such cases is the
coming up of The Fugitive Economic Offenders Act,2018 in order to deal with the
problem of economic offenders leaving the country.
A fugitive economic offender is a person against whom an arrest warrant has been
issued for his or her involvement in economic offences involving at least Rs 100
crores or more and has fled from India in order to escape any legal action.
person can be called as a fugitive economic offender only in respect of offences
mentioned in the Schedule to Fugitive Economic Offenders Act. A person is a
fugitive economic offender only if declared so by the Special Court under the
Prevention of Money Laundering Act,2002. The Fugitive Economic Offenders
Act,2018 is a stringent measure because it allows for confiscation as well as
attachment of properties. Properties resulting from proceeds of crime and well
as benami properties of the offender whether in India or in abroad are liable to
be confiscated. The act also disentitles him from defending civil claims.
The fact that the Act is fulfilling its purpose is visible from the fact that
action has been initiated involving amount of Rs 27968.83 against seven
offenders by December 2018 itself. The first person to be declared an economic
offender within the Act was none other than Vijay Mallya and thus this
declaration would allow confiscation of his properties.
The new measures by the government and the RBI, especially the Fugitive Economic
Offenders Act can thus be considered effective measures to deal with the problem
and would hopefully help in dealing with the problems in the banking, economic
and financial sector in the country by not only bringing the money back but also
acting as a deterrent for prospective offenders.
Banking Laws Articles
Invocation of Bank Guarantee
The Fugitive Economic Offenders Bill, 2018
How to Start a Legal Process Outsourcing Business?
SC Quashes RBI Circular Asking Banks To Take Defaulting Companies To Insolvency
Bombay HC Imposes Cost of Rs 50K On Petitioner Firm For Abuse of Law By Filing
Multiple Proceedings On Similar Grounds
How To Register a Company
Limited Liability Partnership In India
Money Laundering in India
Corporate Social Responsibility
Franchise laws in India