According to the data of RBI, India’s foreign exchange reserve increased by 2.5 billion dollars to a record high of 457.46 billion dollars in the last week of December 2019 and recently it has crossed half trillion dollars for the first time in the week of June 5. Foreign exchange reserves are cash and reserve assets held by a Nation’s Central Bank. They can be used to influence the exchange rate of country’s currency or meet a current account deficit. Forex Reserves have four components, of which assets and gold are the biggest. The movement in foreign currency assets expressed in dollar or rupee terms in mainly due to exchange rate fluctuations of currencies in the basket. In this basket, other currencies like the rupee, yen and euro have let to the movement of currencies against the dollar. Which is manifesting itself in an increase in forex reserves.
Significance of this development
The Rising of forex reserve give a great comfort to the Indian Government and the RBI in managing India’s external and internal monetary issues at a time when the economic development is set to decrease by 1.5 percent in 2020-21. Forex reserve of the country plays a crucial or significant role in maintaining the value of the currency, to controlling of inflation, to regulating the current account deficit and also it plays a very important role in international trade in terms of import and export. Indian currency that is the rupee has also been strengthened because of this rising forex reserve against the dollar. It will also help to maintain reserves for emergencies or any natural disaster.
What is Forex Reserve?
The Forex reserves are also known as Foreign exchange reserve, Foreign currency reserves or Foreign reserves. These Foreign Reserves are the Foreign currencies held by a nation’s Central Bank (RBI). There are seven reasons why banks hold reserves but the most significant reason is to deal with their currencies’ values. Simply, we can say that the total amount of foreign currency held by the Nation’s Central Bank (RBI) is known as the forex reserve and these foreign reserves include foreign bank deposits, foreign banknotes, foreign treasury bills and short and long-term foreign government securities and etc. Such, forex reserve are also utilized by nations to reimburse their credits which they have taken from another nation. The foreign exchange reserves influences the foreign exchange rate of its currency and also maintains confidence in financial markets. The forex reserves allow the reserve bank of India (RBI) to purchase domestic currency which is a liability to the central bank.
Reasons for its rise
The rise is the foreign portfolio investors in Indian stocks and Foreign Direct Investment (FDI) is the main reason for the rise in forex reserve. In this pandemic all other countries economic growth has also slowed down and India’s higher growth as compared to other developed countries is attracting investors or foreign capital Several Indian companies had been acquired by foreign investors in the last two months. Oil import bill has been brought down as the oil prices have fallen which saves the precious foreign exchange. The forex reserves have grown by dollars 73 billion over the last nine months since, the announcement to cut corporate tax rates was started with the finance minster. The Indian markets have seen the foreign portfolio investment taking a turn around and bringing the stocks worth over dollar 2.75 billion. The reliance industries subsidiary, jio platforms has seen a serious of forex inflows which is said to be a rise in the forex investment.
India is the largest gold consuming country, than also it has much less share of gold in the total forex reserve than most developed countries. The foreign exchange reserves are correlated to the Indian rupee position very closely. When rupee value decreases, the reserves also go down. Financial assets which are denominated in the foreign currencies, bonds, gold, cash and bank deposits are included in the foreign exchange reserves of India. In the year of 2003, December the forex reserve of India crossed dollar 100 billion. The forex reserve of India have increased by 48% post 2008 global financial crises. The Reserve Bank Of India bought 200 tons of gold in 2009from the International Monetary Fund (IMF) under its forex reserve management program as stated by IMF’s official press release. In the year 2020 the India’s foreign exchange reserve have crossed dollar 500 billion on June 5th.
Over the past years the foreign exchange reserves have significantly changed as the analysis reveals. In the year 2020 as we said the foreign exchange reserve of India have crossed half billion dollars with dollar 463.630 billon dollar of foreign exchange assets components, around dollar 32. 352 billion gold reserves, around 1.442 billon of special drawing rights with the IMF and around dollar 4.278 billion reserve position. Overall, the research states that forex reserves have another names like foreign exchange reserves, foreign currency reserves and etc. It also noted that how it is important for the Indian Government to have a stable forex reserves like to pay the import bills, to maintain the confidence of investors in Indian market, it will also help to maintain reserves for emergencies as above said and Reserve bank of India also take necessary steps to make sure that there is proper balance of forex reserves in India.
The legislators need to support privacy to establish consumer confidence. RBI on June 4, 2020 had released the consumer confidence survey which was conducted through telephonic interviews across May 5 to May 17, covering 13 cities. The consumer confidence in India has collapsed in less than two months during the Covid-19 lockdown. Covid-19 pandemic has caused many countries to shut large segments of their economies. The relationship between the number of COVID-19 cases and consumer confidence provides insight into the optimal prioritization of these two competing aims. A strong negative correlation indicates that reopening the economy before the number of cases falls is less likely to reignite economic activity. On the other hand, a weak negative correlation indicates that consumer confidence and consumer spending could return even without curbing the number of COVID-19 cases.
The report is showing that the consumers have started to enter the zone of pessimism. It is talking about how the consumers have become pessimistic on the current economic situation regarding employment, income and their spending. Until now, it was only minority people who felt that there are chances of their income’s shrinking. But the recent survey shows that 50% are seeing their income’s coming down. Households see the general prices and inflation rising over as compared to the previous rounds. As a result, 10% said that they would spend less on essentials and around 46% said that they would cut their spending on non essential items. Consumers have reported sharp cuts in discretionary spending. There was a sharp increase in the median inflation perception and expectations in May 2020. The real GDP of our country is expected to contract by 1.5% in the year 2020-21. It is also predicted that it will rise by 7.2% in the upcoming year. In the same way, the Real Gross Value Added is expected to contract by 1.7% but will probably expand to 6.8% in the upcoming years.
Salient features of the report
The consumer confidence index and the future expectations index recorded a sharp fall in May 2020.
The perception of the consumer on employment scenario, economic situation is going down to the contraction zone.
Consumers reported sharp cuts in discretionary spending and overall consumer spending remained afloat due to relative inelasticity in essential spending.
What is consumer confidence
Consumer confidence is basically an economic indicator. It measures the optimistic level that the consumers have in the country’s economy and their own expected financial situation. When there is an increase in the consumer spending, it helps the economy sustain its expansion. The consumer confidence declines when they become less certain on their financial prospects. Due to such reasons they spend less of their money, which in turn reduces the overall sales. If the consumer spending declines, then the economy experiences a slowdown and eventually entering the state of recession.
The consumer confidence index is basically a survey, which is administered by the conference board.
It is based on the perception that when the consumers are optimistic they usually spend more and they will stimulate the economy if they are pessimistic.
It is generally a confidence survey of around 5000 households and is released on the last Tuesday of every month.
House prices- Rising house price enables households to re mortgage and gain equity withdrawal.
Uncertainty- A political or an economic change can lead to uncertainty which reduces confidence.
Economic growth- Consumer confidence increases when there is a positive economic growth and recession will associate a fall in consumer confidence.
Current economic situation- The news of loss in employment is a key factor that will make the consumer confidence very low. The current Covid-19 crisis has seen a drop in the employment sector, resulting in joblessness of many citizens. This makes the consumer confidence very low.
Personal debts- It will be a major concern if the economy slows down or the interest rate are too high.
Inflation and real wages- Higher the inflation, lower will be the confidence. In the same way, stagnant and falling real wages will make people more pessimistic and which in turn leads to low consumer confidence.
Widespread household deleveraging lowers the consumer confidence.
The dominance of short term thinking leading to absence in long term strategic activity leads to lower the consumer confidence.
The consumer confidence has been conducted by the RBI on a quarterly basis since June 2010 and then on a bi monthly basis since March 2016. The expectations and the consumers spending in the report are of three forms: positive, neutral and negative; and increased, decreased and remained the same. The two sub-indices are combined by the RBI to calculate the consumer confidence. The current situation index (CSI) and the future expectation index (FEI) are calculated on the net responses. CSI/FEI= 100 + average of net responses. The CSI and the FEI can take values between 0 and 200. If an index value is over 100, then it implies that the consumers are optimistic about the current and future situations. The responses to the three main variables; income, spending and employment are recorded in a percentage form. The spending and income will be the consumer’s own personal spending and personal income.
If confidence falls because of uncertainty, it can have a significant impact on the other economic variables like the firms may react by delaying the investments. Sometimes confidence can be influenced by non-economic factors and prove temporary, e.g. a major sporting success may improve confidence, but this could be very short lived.
The consumers across the world are closely following corona outbreak. In Japan, consumers more closely follow the number of COVID-19-induced deaths, which is likely a function of scepticism regarding testing in Japan. This suggests that policymakers have to slow the cases confirmed and the induced deaths before consumer confidence and consumer spending can improve. Reopening the economy in an environment of depressed consumer confidence is unlikely to generate adequate economic activity to justify the health risks.
Author: K.Yugantara from Sastra University, Thanjavur.
Editor: Silky Mittal, Junior Editor, Lexlife India.
From 5th May 2020, in the news, there have been talks that RBI may open doors for private players to set up a new umbrella entity for Retail Payments System Infrastructure. RBI has also given approval to private players for setting up retail payment systems under the Payment and Settlement Act, 2007, which is the statute that governs the payment and settlement systems in India. Payment and settlement systems play an inevitable role in improving the economic efficiency and independence of our country.
These systems comprise of all types of methods that are used to systematically transfer money-currency, paper instruments such as cheques, and various electronic channels. The Central Bank of India/RBI is the driving force in the development of national payment systems. The Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), a subsidiary committee of the RBI is the highest policy-making commission of payment systems in India. Its sole prerogative is to supervise the regulation and supervision of payment systems in India, which has been discussed in the PSS Act. This Act, consisting of 8 chapters with 38 provisions, has received the “green-light” by the President on 20thDecember 2007.
Salient features of the Act
Ambiguity regarding issuance of credit cards
As of 2017, under the PSS Act, 2007, American Express Banking Corp, USA, Diners Club International Ltd, USA, Mastercard Asia, Singapore, and Visa Worldwide Pte Ltd, Singapore, have been authorized to issue credit cards in India. Because credit card operations are not included within the ambit of “prepaid instruments”, in the absence of any specific regulatory framework under the PSS Act, 2007, it still remains a grey area for fintech entities. Thus, it can be inferred from this that the issuance of credit cards is restricted for banks and permitted NBFCs only.
Entities created by RBI under PSS Act, 2007
According to the provisions of Section 4 of the PSS Act, no person other than the RBI unless approved beforehand can operate a payment system in India. All entities who wish to set up or use these payment systems are required to apply for authorization under the PSS Act, 2007. Any unapproved operation of a payment system would be considered as an offense under the PSS Act and susceptive for penal liability. After registration, the payment system provider is required to operate the payment system in accordance with the provisions of the PSS Act, 2007, and the regulations, terms, and conditions of authorization and RBI directions on a regular basis. Section 20, 21, and 22 of the PSS Act, 2007 mandated the system provider to provide for disclosure of the terms and conditions including the charges, limitations of liability, etc. to the customers. The system provider is required to keep the documents and its contents as confidential, except according to the procedure established by law.
Prepaid payment instruments
In conformity with the PSS Act, the RBI has allowed for the issuance of such instruments which are used to access the prepaid amount to finalize transactions and have also laid down the means to settle transactions. These guidelines state the definition of ‘prepaid payment instruments’ as payment instruments that help in the facilitation of the purchase of goods and services, along with funds transfer compared to the value stored on such instruments. They encompass many forms; as smart cards, magnetic stripe cards, internet accounts, internet wallets, mobile accounts, mobile wallets, paper vouchers, etc. which can be used to get the amount in advance. The pre-paid payment instruments that can be issued in India are classified under three categories: closed, semi-closed, and open system payment instruments.
The banks are the only ones allowed to give out open-system payment instruments that can be used for the purchase of goods and services, and also tolerate cash withdrawals from ATMs. These are payment instruments that can be used at any card-accepting merchant locations and also permit cash withdrawal from ATMs. Eg. credit cards, debit cards, etc. Closed system payment instruments run on the principle of when the goods or services are acquired directly from the entity which provides for this financial instrument. They do not allow for cash withdrawal or redemption. Eg. The amount so credited can be utilized only for either travelling or recharging of mobile respectively in “Ola Money/Freecharge” cashless wallet.
Settlement of payments for electronic payment instruments
The RBI has considered it necessary to frame specific guidelines and directions for the safe and orderly conduct of e-commerce transactions. Intermediaries (eg. aggregators and payment gateways) that facilitate payment services, though not authorized by RBI under the PSS Act, 2007 are however required to route their transactions only through a nodal account opened with a bank under the guidelines. There is a stipulation by the RBI that all accounts opened and maintained by banks for facilitating collection of payments by middlemen from customers of merchants are to be treated as internal accounts of the banks.
Objectives and purposes
RBI’s statement of purpose for payment and settlement system states that the initiative would be to assure the quality of all payment and settlement systems operating in the country with 5 words-safe, secure, sound, efficient, accessible, and authorized. Adhering to the PSS Act, 2 Regulations have been made by the RBI:
1. The Board for Regulation and Supervision of Payment and Settlement Systems Regulations, 2008 and
2. The Payment and Settlement Systems Regulations, 2008.
The BPSS gives assent to the powers on behalf of the RBI, for regulation and supervision of the payment and settlement systems under the PSS Act, 2007. The Payment and Settlement Systems Regulations, 2008 oversees matters, for example, application form that has to be authorized in order to maintain the functioning of a payment system, instructions on how to pay, and determination of standards of payment systems, publishing of returns/documents/other information, requisition of accounting information and balance sheets by the provider of the system, etc.
Section 2(1) (i) of the PSS Act 2007 defines that a payment system is a catalyst for the payment to be executed between a payer and a beneficiary, which is a process including clearing of payment and/or settlement services, excluding a stock exchange. It is also expressly written that a ‘payment system’ involves the systems sanctioning credit card, debit card, smart card, money transfer operations, etc.
As described under the chapter-1 of The Payment and Settlement Systems Act, 2007; that it extends to the whole of India, under Section 1 clause (3). Important definitions in the definition clause:
‘derivative’ which is an instrument used in payment systems whose value is derived from the change in interest rate, foreign exchange rate, credit index, etc.
‘Netting’ refers to the determination by the system provider of the amount of money or securities.
‘Payment system’ is also defined under this Act which is responsible for enabling payment system and operations.
‘Settlement’ which refers to the settlement of payment instructions which involve in certain obligations occurring during the time of payment.
‘systemic risk’ which describes the occurrence of risk through any disruption in the system or any other problem occurs during the time of payment or maybe of any inability of service by system participant.
Under Section 3 of Chapter 2 of The Payment and Settlement Systems Act, 2007 where the role of Reserve Bank has been described in clear, which follows with the committee of some members which is known as the Board for Regulation and Supervision of Payment and Settlement Systems.
Misconduct and punishments
Chapter 7 of this Act deals with offenses and penalties.
If an authorized person contravenes the provisions, then he shall be punishable with fine and imprisonment for a term not less than one month which may exceed up to 10 years and fine extending up to Rs. 10 lakhs.
If any authorized person is providing false documents or information, then the offender is punishable with imprisonment which may extend up to 3 years and with liable fine which extends from 10 lakh to 50 lakhs.
If a person is unable to present any information, then he must be punishable with a fine of Rs. 25 000 per day or of Rs. 10 lakhs.
It has been discussed that Reserve Bank has certain powers to impose fines on any contravention if noticed. While in the matter of any offense which is cognizable, no court deals with the proceedings of that case until a proper application has been received by a court which is to be written by the officer of Reserve Bank.
A few marketing processesshould be accomplished which create an awareness of a payment instrument among people which would depend on the marketing campaigns of the service providers. The marketing campaigns would advertise to the customers on the pros, security, and safety of the payment instrument. The level of transparency of the campaigns and the confidence gained by the customers during the campaign would facilitate large scale migration to these payment modes.
It should deal with the level of technology because the level of technological adoption in the banks would also decide the level of promotion of new payment products by banks. Banks that have implemented Core Banking Solutions are observed to have provided the customers with multiple delivery channels like ATMs, internet banking, and mobile banking systems for initiation and receipt of payments.
The knowledge & proficiency of staffshould be checked whether they are aware of all the necessary concepts or not. While marketing can encourage customers to attempt new payment instruments, it is necessary that all the branches of the bank brought on to the electronic payment platforms are adequately manned by trained employees. It would be the responsibility of these employees to ensure that the payments are processed seamlessly. An unmotivated or unskilled employee with no incentive can lack the confidence to operate the new systems and therefore may not encourage the use of new payment instruments in their interactions with bank customers.
Customer serviceis a prominent stepping-stone of any service industry. The payment systems are no exception to this. Customer services include service level at the point of service, information dissemination, and other services. To confidence of a customer, it is necessary that the service providers redress these specific grievances in a timely manner.
An awareness campaignshould be started for the benefits of the public at large because of the lack of adequate awareness of the payment products was one of the factors inhibiting the growth of electronic payment in the country. It was suggested that the Reserve Bank conducts awareness campaigns through various media for promoting public/corporate use of electronic payment products. Banks on their own may also carry out campaigns to promote electronic payment products. They can educate customers who approach them for the issue of drafts and payment orders.
There should be an inauguration of regulatory changes. However, Credit cards and Debit cards are the only electronic payment instruments currently available for use at merchant locations. While the use of these instruments has been increasing, the use of these instruments for micropayments is not cost-effective. It was suggested that RBI introduce the promotion of payments through mobile phones and pre-paid smart cards. It would require that RBI carry-out regulatory changes to enable improvement in the maintenance of customer accounts at the mobile companies and merged accounts at banks.
On 10th Jan 2020, via a circular, a systematic framework was declared with the purpose of imposing a penalty related to money on lawful payment system operators/banks under the Payment and Settlement Systems Act, 2007. Payment and settlement systems are a vastly growing area, which involves advanced market policies with newer innovations in technology. One demerit of the PSS Act is that definition of ‘bank’ is not specified. Reserve Bank has to put efforts to ensure among the public that all payment and settlement systems in the country are safe, efficient, interoperable, authorized, and accessible, as it may also be furthering financial inclusion and compliance with some international standards.
The main focus is to shift the cash payment system to electronic/cashless payment systems. RBI is required to make regulations for the payment instructions and other matters which cause disputes between both parties. Also, a suggestion is that it should be followed with stronger legal provisions which include the Information Technology Act, 2000 as well. My final suggestion is that there should be an amendment in 2020 or 2021 to be up-to-date with the digital advancement in India in the past decade.
Author: Anjali Baskarfrom CHRIST (Deemed to be University).
Editor: Arya Mittal from Hidayatullah National Law University, Raipur.
India and World for that matter, are going through the difficult times of pandemic of COVID – 19. The world has been shackled by this unforeseeable pandemic. It has become Hobson’s choice for countries – save lives of people or save the economies. This, indeed, is the tough and unprecedented time for the mankind. In this time, while the global economy is stumbling and stiffing, India is no exception.
To combat the evil of COVID – 19, India fortified itself with the 21 days lockdown, which was to be lifted by 14th April but due to the gravity of the circumstance, it further extended till 3rd May. In the wake of lockdown, states have sealed their borders and interstate transportation has stopped since then. Due to this, state economies have suffered the substantial damage and states are finding it difficult to maintain their cash flow and other transactions.
To fight this, RBI has come up with a number of changes in their overdraft policy for the states. This is the second time in a week that the central bank has relaxed states’ ability to borrow, after increasing their ability to borrow short – term loans on 31st March.
The Reserve Bank of India (RBI) relaxed the norms of overdraft facility for the states facing short term mismatches in the wake of pandemic crisis. As per the circular of the RBI, this shall remain in the effect till 30th September, 2020 which means that the overdraft facility shall be extended till 30th September, 2020.
In this circular, RBI said that States or Union Territory (UT) can avail the overdraft facility for 21 working days. Number of the days has been extended to 21 working days which, prior to this circular, was 14 working days as stipulated. Correspondingly, the number of days for which a State / UT can be in overdraft in a quarter has been increased to 50 working days which, prior to this, was 36 working days as stipulated.
Moreover, along with these developments, RBI has also increased the Ways and Means Advances or the WMA limits by 30%. The main aim behind this step of RBI is to enable the states to tide over the financial crisis caused by the crisis of pandemic COVID – 19.
Significance of this development:–
If we analyze this step of RBI by which the central bank eases the overdraft facility norms and the WMA limits, it tells that in the unprecedented and unforeseeable circumstance like this, developments like these can help the state economies in various ways. This development will help the state to tide over the financial crises caused by the pandemic. Since the date on which the lockdown has been announced, states have sealed their borders which has impacted the inter-state business adversely. Moreover, the states have seen the increase in the health expenditure.
By this, it is very much evident that the states are facing problems in maintaining the economy and as mentioned earlier, it is Hobson’s choice for the states and for center too, to save the economy or to save lives of people. In this extraordinary crisis, this development will be blessings in disguise for the state governments. This development will provide two extremely crucial elements to state. First one would be time, as states have more time to replay their overdrafts and second would be of money.
What is the facility?
In the usual parlance, overdraft is the borrowing facility attached to one’s bank account, at certain agreed limit. The most advantageous thing about the overdraft is the convenience of an overdraft. It can be drawn at any time and it is the most useful for the day-to-day expenses as it can help in maintaining the cash flow inexorably.
The same way, states and center have this facility of the overdraft too. They can ask for the overdraft from RBI and RBI provides the states / UTs and center with overdraft at decided interest rates. One manifest characteristic of the overdraft is the time span for which one can avail it. It is a short term measure for the availability of funds. Till now, when the state avails the overdraft from RBI they have to pay the amount in 14 working days, which, after the recent announcement, has been increased to the 21 working days.
With the facility of overdraft of RBI, the central bank has also changed the norms for Ways and Means Advance (WMA). Ways and Mean Advance is the short term liquidity arrangement made with the central bank by center and states to tide over their cash flow and other temporary mismatches. Under the WMA facility, center or state government can borrow the money for short term from central bank at the current rate of repo rate. But government has to return the sum in 90 days and if this limits gets extended then it would be counted as the overdraft under the RBI policy. The central bank has also increased the limit of this overdraft up to 7 working days.
Its pros and cons
When we analyze the pros of the development, as mentioned earlier, it is blessings in disguise.
The step would provide liquidity to states to manage their cash flow mismatches for short term.
In the larger picture, this development could incentivize the government to spend more on the health facilities.
The facility is availed for the short period of time. There is still a state of anonymity regarding the lockdown and pandemic. In this unforeseeable time, we can’t say that whether the measure for short terms would be proved to be helpful in long run.
There is a word on the street that this pandemic crisis may continue till July or August. In this time, though this development is commendable, a comprehensive and objective long term policy for the states to enable them in maintaining the cash flow mismatches.
Different states have different economies and thus the lockdown has affected different states in different manner. Meanwhile some of states might not be in the position to pay for the overdraft even after the completion of the stipulated time.
There is a need for comprehensive and properly contemplated policy which enables the state to maintain liquidity in the long terms.
From the point of view of short term policy and management, this development will help states in all the way possible. But the question seems bigger than this.
We don’t know how far we all have to go. In this extraordinary times, we cannot be sure of anything. States are spending on test kits, basic amenities and what not. But the problem is that states are only spending. The income of the state has almost stopped so it has just become the way of one way spending where the element of income is conspicuously absent. In this time, apart from the short term policies, we need the preparation for the long term policies and decisions.
Approaching the upcoming time without any kind of preparation or apparatus would cost us much more. Therefore, it is the need for the hour that we don’t stop by just short term policies. As argued above, neither of us know what time has for all of us in future. Therefore it is necessary that we have the needful policy for the long term too.
There is still a question whether even the short term policies would be sufficient or not. The WMA window, as already pointed out, is intended only to tide over temporary mismatches in cash flow of receipts and payments. Given the likelihood of total government borrowings crossing Rs 20 lakh crore – a conservative underestimate – a WMA limit of Rs 120,000 crore for the Centre and Rs 51,560 crore for states may prove grossly insufficient.
We are not raising the question or doubt on the policies but the policies have to be according to the situation and circumstances. This state of obscurity demands something more from us. Therefore it is necessary that while taking any decisions or changing the existing policies we keep in mind certain questions.
First, no matter how small decision is, it can impact enormously. So we need to contemplate that whether the steps taken would be sufficient or not. Second, any short term policy can have adverse impact on the long term policy or vice versa. Therefore the policies regarding short term and long term should not be incongruent to each other.
As historian Yuval Noah Harari said “Our any decision today can affect our future.” This is an extraordinary circumstance and we have to be prepared for the upcoming times. Governments, citizens, institutions and all other elements of the society are doing the best they can. But as mentioned above, time demands something more from us. It will be beneficial for us to have proper long term policies.
If we are to combat the crisis of the pandemic, we have to be ready from all the aspects. What RBI has done is commendable but still a much more contemplation is necessary for the upcoming times in regard to long term policies.
Time will be answer to itself. But there is no second question that this pandemic has shown the world and human kind that what actually our priorities ought to be. This too shall pass!
Author: Akshat Mehta from Institute of Law, Nirma University.
Editor: Arya Mittal from Hidayatullah National Law University, Raipur.
The Reserve Bank of India (hereinafter, RBI), also known as the Central Bank of India, was established by the Reserve Bank Act, 1934. The Preamble to Act of 1934 promulgates the objective of RBI which is “to regulate the issue of Bank notes and the keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage”. Since then, as the dynamics of the Indian economy changes, roles of RBI changes.
As per the Act, the key role of RBI is to ensure stability of money which in turn preserves confidence in the value of the country’s money or we can say sustains the purchasing power of the currency. Eventually, this helps in sphering around the 6 stable expectations of inflation, irrespective of the origin of inflation. Additionally, the RBI has two other important considerations; inclusive growth by promoting financial inclusion, as well as financial stability.
In a country where a large section of the society is still poor, inclusive growth assumes great significance. Access to finance is essential for poverty alleviation and reducing income inequality. As the central bank of a developing country, the responsibilities of the RBI also include the development of financial markets and institutions. To be precise, broadening and deepening of the structure of financial markets and increasing their liquidity and resilience resulting in their allocation and absorption of the risks in financing India’s growth is a chief grail of RBI.
Recent development to ease the impact of lockdown
In light of the recent pandemic created by the threats of corona virus, the RBI has noted the expected impact on the Indian economy and thus, to combat it, has reduced the key interest rate by 75 bps and allowed equated monthly instalments (EMIs) to be deferred by three months. In addition, the repo rate was lowered by 75 bps making it 4.4% and the reverse repo rate was lowered by 90 bps point making it 4%. The higher reduction in the reverse repo rate was objected to encourage banks to lend more rather than keeping their excess with the RBI.
The step was taken on the third day of nationwide lockdown because of which the financial market faced instability. The governor, Shaktikanta Das, has expressed the concern by introducing war like effort inclusive of both conventional and unconventional steps to fight against this crisis.
Additionally, RBI has lowered the cash reserve ratio of banks which injected ₹1.37 lakh crore liquidity into the market making it total infuse of ₹3.74 lakh crore into the banking system when accompanied with other measures.
Needless to say that, RBI has cushioned the market for borrowers and lenders by allowing banks to defer payment of EMIs on home, car, personal loans and credit card dues for three months up till May 31st, 2020. There wouldn’t be any implication on the credit score of the borrowers because non-payment will not lead to non-performing asset classification by banks. In pursuance of the step taken by RBI, State Bank of India, the largest lender of the nation, reduced the repo rate by 75 bps.
Interest rate on external benchmark linked loans was reduced from 7.8% to 7.05% and those are linked to repo rate were reduced to 6.65%. Ensue, EMIs on Home Loan accounts are now as cheap as approx. ₹52/1 lakh on a loan of 30 years. The bank has also reduced the retail fixed deposit rate by 20-50 bps across all tenures. Bulk deposit rates were cut by 50 bps to 100 bps across tenors.
Significance of this development
By this giant step to combat the outbreak, RBI used its monetary measures in such a way that gives relief to the financial market till everything comes back to square one. The new repo rate, which is 4.4%, will be applicable on all term loans ranging from home, auto, personal, crop and retail. Debtors are authorised to grant a moratorium of three months on payments in installments like EMIs, credit card dues, bullet payments and interest and principal payments, etc which are due as of March 1st, 2020.
It is not to be misunderstood that the loans are waived because the tenure of them will be extended by 3 months after the moratorium. All term loans like agricultural term loans, retail and crop loans and working capital payment will be covered by the three-month moratorium. This also means that there would be no waiving of interest as it will accrue on the outstanding payments. At the end of 3 months, interest shall be added to the outstanding loan. To ensure stability, RBI has introduced Rs. 3.74 lakh crore liquidity into the financial system.
The scheme will apply to only those who won’t be able to make their outstanding payments on time. Borrowers with standing instructions to deduct EMIs toward borrowings will have to approach banks to seek the benefit.
Banks have discretion in marking the limits on working capital and can grant relief wherever possible on case to case basis. The businesses may request the Bank to re-assess their Working Capital requirements on account of disruption of their cash flows or elongation of cycle of their Working Capital. Businesses may also come forward requesting curtail in margin on NFB facilities or also relief in Security wherein bank will make decision on the basis of the genuineness of the request.
It is expected that these measure would lead to reduced lending rates. The 3 month extension would provide succor to banks as their NPA levels would not rise up. This might lead to preservation of capital for business rather than using it for provisions. Apart from that, this outbreak also made borrowers incapable in paying back their dues to the banks on time so both the sides of the transaction would take a sigh of relief.
Types of rates decided by RBI
Pursuant to the amendment to RBI Act, 1934, in May 2016, the primary objective of monetary policy is to maintaining price stability while keeping in mind the objective of growth. There are various direct and indirect instruments used for implementing monetary policy including Repo Rate, Reverse Repo Rate, Liquidity Adjustment Facility (LAF), Marginal Standing Facility (MSF), Corridor, Bank Rate, Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Open Market Operations (OMOs) and Market Stabilization Scheme (MSS) . They are briefly explained below:
Repo rate: The interest rate at which RBI grants loans to banks against government securities or any other collateral under the Liquidity Adjustment Facility (LAF). The term ‘Repo’ stands for ‘Repurchasing Options’. This tool is used to control inflation. Increased repo rate provides disincentive to commercial banks to borrow from RBI which in turns absorbs the liquidity from the market.
Reverse repo rate: The interest rate at which RBI borrows loan from commercial banks against the collateral of government securities under the LAF. This tools helps in controlling the money supply in the economy.
Liquidity Adjustment Facility (LAF): The LAF comprises overnight as well as term repo auctions by way of repurchase agreements. This helps banks in the management of liquity of daily basis by borrowing and lending quickly in cases of emergency against government securities. This consist of repo and reverse repo operations to inject and absorb money from the market. The transactions under LAF are entered online via Real Time Gross Settlement method.
Marginal Standing Facility (MSF): A facility under which commercial banks can borrow additional amount of overnight money from the RBI in case of emergency when there is no scope of inter-bank liquidity. This provides a safety wall against unforeseen contingent liquidity risks to the banking system.
Corridor: the corridor system serves as the basis of interbank interest rates as the MSF rate and reverse repo rate determine the corridor for the regular transactions in the average call money rate.
Bank rate: the rate at which the RBI grants loans to domestic scheduled commercial banks by buying or rediscounting bills of exchange or other commercial papers. Section 49 of RBI Act, 1934 provides for publication of this rate. This rate works parallel to the MSF rate which is why it changes automatically when MSF rate changes alongside policy repo rate changes. Lower the bank rate, higher the money supply in the market and vice versa. It is to be noted that repo rate is charged against the repurchase of securities sold by the commercial banks. Repo rate is usually kept lower than the bank rate.
Cash Reserve Ratio (CRR): All Central banks of all the nations emphasise the importance of keeping reserves with them made by domestic commercial banks to control inflation, money supply and liquidity in the economy. CRR is a part of the same reserve under which RBI mandates commercial banks to keep a part of their cash as reserve either in bank’s vault or with RBI, however, they do not get any interest on this. If the CRR is 5%, the banks are required to maintain 5 percent of their Net Demand and Time Liabilities (NDTL) as cash reserves. They are strictly to be maintained in cash and cannot be used in lending or borrowing.
Statutory Liquidity Ratio (SLR): It is also a part of reserve that a commercial bank has to maintain. However, unlike CRR this can be maintained by gold, government securities or any other liquid asset along with cash. Higher SLR controls the inflation whereas lower SLR fuels the money supply to grow. SLR is mentioned and publisher under Section 24 (2A) of Banking Regulation Act, 1949. This also encourages commercial banks to invest in government bonds.
Open Market Operations (OMOs): This allows dual transactions of sale and purchase of government securities by RBI in the open market in such quantities that affects the money supply in the economy. This is a tool used by RBI to manipulate rates and cope with unwanted situations in the financial market.
Market Stabilisation Scheme (MSS): This instrument for monetary policy was introduced in 2004 to intervene in the surplus liquidity arising from large capital inflows. Under this scheme, RBI sells short term government bonds to absorb the excess liquidity. The bonds so issued under this scheme are called Market Stabilisation Bonds (MSBs). RBI, thus, holds debts against the government of value equal to that of MSBs. The money obtained herein cannot be used by the government in the economy but are maintained with RBI.
It is disheartening to observe that India is looking at the worst annual rate of GDP expansion since the global financial crisis of 2008-09. A further threat is also expected by economists due to the COVID-19 outbreak.
However, as rightly quoted by the RBI Governor, the prima concern is safeguarding Indian economy via “strong and purposeful action”. Thus, there is an imminent call for all the market players to introduce such measures that are on the lines of RBI to combat the impact of this lockdown. Since February, the RBI has already injected Rs 2.7 lakh crore into the system, which on addition with other liquid inflows of RBI, makes 3.2 % of the GDP.
The central bank will continue to be cautious and take all necessary and adequate measure to subjugate the threat of coronavirus on the economy. The central bank will sustain its accommodative stance of policy as long as necessary to rejuvenate development along with sustaining inflation within expected targets.
Author: Vidhi Saxena from National Law Institute University, Bhopal.
The Reserve Bank of India in consultation with the Government of India has introduced a new channel of investment for the Non-Residents of India in specified government securities, called the Fully Accessible Routes (FAR). So as to operationalize the intent articulated within the Union budget, where Nirmala Sitharaman, the Finance Minister, said that certain specified securities shall be opened fully to the foreign investors, RBI introduced this channel opening up the investment opportunities for the foreign investors without any ceiling or restrictions.
Under this scheme, the eligible investors are not subject to any ceilings for investing in specified government securities (G-secs). No foreign portfolio limits shall be applicable to the special securities till the time of their maturity under this scheme. The scheme shall operate with the two existing schemes – Voluntary Retention Route and the Medium-Term Framework.
India is a developing nation and has always focused on growing in every aspect. Providing the foreigners and the non-residents with an open route for investment will be advantageous to both, the country as well as the investors in many ways.
Significance of this development
Inclusion in the Global Bond Indices – With the introduction of Fully Accessible Route for the foreign investors, Indian G-secs are now listed in the Global Bond Indices as the country tends to attract access cheap liquidity in the overseas market.
Inflow of Stable Foreign Investment – Removal of the restrictions on the G-secs would further facilitate the inflow of stable foreign investment in Indian bonds. It will open government securities fully for foreign investors to channelize their money in Indian G-secs.
This will also help the country to attract large funds from major global investors which includes the pension fund. Furthermore, this will also facilitate the non-residents to access Indian G-secs with ease.
Equal Investment Opportunities – The central bank said that all the issuances of G-secs of 5-year, 10-year and 30-year tenors from the financial year 2021 will be eligible for investment as ‘specified securities’. This tends to open up equal investment opportunities for the residents as well as the non-residents as the same specified G-secs are available to all.
At the time of the nationwide lockdown due to the outbreak of coronavirus, the Indian Economy is facing a serious setback. “In this unprecedented situation, the RBI and the Finance Ministry are working together to support the financial systems to whatever extent possible,” said Paresh Nayar, the head of fixed income and forex at First Rand Bank.
In addition to this, the scheme shall operate along with the two existing schemes namely-
(1) Voluntary Retention Route (VRR) – This is a scheme which encourages the Foreign Portfolio Investors (FPI) to undertake long-term investments in Indian debt markets. Under the VRR, the eligible investors are subject to various limitations with respect to the investment limit and the retention period of the securities. However, with the recent amendment, VRR was made much more flexible by raising these limits.
(2) Medium – Term Framework (MTF) – This scheme is similar to the VRR as it also imposes restrictions and ceilings on the investors.
Salient features of this scheme
Eligible Investor: For the purpose of defining an ‘eligible investor’ for this scheme, reference shall be made to Section 2 of the Foreign Exchange Management Act, 1999. Under the abovementioned section, “a person resident outside India” means a person who is not a resident in India. Therefore, this route is open for all the foreign investors as well as residents of the country.
Specified Securities: Specified Securities shall mean the Government Securities as periodically notified by the Central Bank for investment under this Route. The RBI also said that all new issuances of G-secs of 5, 10 and 30-year tenor shall fall under the category of “specified security”.
Investment Limit: The eligible investors shall not be subject to any quantitative limit on investments in specified securities. The investments made under FAR shall not be subject to any restrictions specified in Section 4 sub-clause (b), (c) and (e) of the Investment by Foreign Portfolio Investors (FPI) in Debt. These clauses lay down the restrictions on foreign portfolio investors. Sub-clause (b) of Section 4 specifies the minimum residual maturity requirement, (c) states the security-wise limit and (e) specifies the concentration limit for the securities, otherwise. Securities under FAR are not subject to any of these limits, as mentioned by the RBI.
Treatment of Existing Investment in Specified Securities: Existing investments by eligible investors in specified securities shall be reckoned under the Fully Accessible Route.
Process for Investment and Reporting:
1. Foreign Portfolio Investors (FPIs), Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and other entities permitted to invest in Government Securities under the Debt Regulations can invest under this route as hitherto under existing arrangements.
2. Eligible investors other than those referred above may invest through International Central Securities Depositories. However, the process for such investments shall be intimated by the RBI in due course.
What are securities?
Security is a negotiable, fungible, financial instrument that holds some sort of monetary value such as stock, bond, options contract, mutual fund, etc. The securities which are held for the purpose of investment are referred to as the investment securities.
Securities can be broadly categorized into two different types – Equity securities and Debt Securities. However, there are also Hybrid Securities which combine the elements of two main types of securities.
An equity security represents ownership interest held by investors in an entity (an organization, association or trust). When a business goes to the capital markets and issue securities in the form of publicly-traded stock, it is called equity. When an investor buys such security, he purchases ownership in that company. If the company earns profit, either the investor receives his share in the form of dividend or there is a stock rise in value. Furthermore, if a company decides to wind up, the shareholders are paid only after all the debtors are paid.
When a business opts to borrow money to grow, they may avail loans from the banks through which only a specified amount can be availed. Once this option is exhausted, the companies tend to issue debt securities called bonds, in the capital market. When an investor buys a bond, he technically lends the money to the company which makes him a debtor of the company. The money so lent by the company has to be returned fully with interest. Moreover, if the company decides to wind up, it has to pay back such securities on priority.
Investment options for Non-Residents/Foreigners
The demographic location of India, its strong economic growth and stable government has made India an attractive destination for the investors around the globe. There are numerous options for such investors in the country, a few of which are listed below:
(a) Bonds and Government Securities: Government and corporations often issue bonds in order to raise money. When an investor buys these bonds, he lends money to the issuing entity and becomes a debtor for the entity. Investors are entitled to receive fix returns on such investment. NRIs can invest in G-secs through their NRI/NRO accounts.
(b) Equity: The Portfolio Investment Scheme by the central bank enables the NRIs to invest in the Indian Stock Market. However, the investors are subject to ceilings and restrictions in such an investment method. The investors need to open a Demat account with a SEBI registered brokerage firm. In furtherance, a trading account with a stockbroking firm and an NRE or NRO account with a bank is required.
(c) Insurance: Insurance is one of the most preferred investment options for Indians. NRIs can also buy and invest money in insurances in India. With the passage of time, the country has identified the preferences and the needs of the non-residents as well, as a result of which, certain insurances are designed especially for non-residents.
(d) Mutual Funds: Mutual funds are one of the most flexible investment options for foreigners. Only Indian currency with an NRE/NRO account is the only pre-requisite for an investor to invest in mutual funds in India. There are no limitations to NRIs for investing in mutual funds in India.
Investment options for Indian residents
There are a number of investment options for Indian Investors. Some options are traditionally being used across generations while many have also emerged over time. Some of the popular investment options are listed below:
(a) Stocks: Stocks, which are commonly referred to as the company’s shares are one of the most popular investment options in India. Buying a company’s share allows you to participate in the company’s growth as a shareholder is the owner of the company. The companies that are publicly listed on the stock exchanges offer stocks and can be bought by any investor.
(b) Mutual Funds: Mutual Funds have gained popularity as an investment option with the due passage of time. It is an investment vehicle that pools the money of several investors and invests it in a way to earn maximum returns. Different types of mutual funds invest in different securities.
(c) Fixed Deposits: Fixed deposits, as the name suggests, are for a specific, pre-defined time period. The most attractive features of fixed deposits are that it offers guaranteed returns and capital protection. Moreover, this is a risk-free investment option. These are also called the ‘locked-in’ investment, however, the investors are often allowed to avail loans against them.
(d) Recurring Deposits: This type of investment is offered by banks and post-offices. A recurring deposit (RD) allows an investor to put in a specific amount every month for a pre-defined period of time. The interest rates are decided by the institution offering it. This also ensures capital protection as well as fixed returns.
(e) Public Provident Fund: It is a long-term investment vehicle that comes with a lock-in period of 15 years. This is also a tax-saving instrument. The PPF rate is defined by the Government of India each quarter.
(f) Employee Provident Fund (EPF): This is a retirement-oriented investment scheme that earns a tax break under Section 80C. A part of an employee’s monthly salary is deducted for the EPF and the same amount is matched by the employer. At the time of maturity, the withdrawn corpus from the EPF is entirely tax-free. The government decides the EPF rates every quarter.
(g) National Pension System (NPS): This is a relatively new tax-saving investment option. Under this, the investors stay locked-in until the time of retirement. This option is not entirely tax-free and a part of it has to be used to purchase an annuity which gives the investor a regular pension.
India is one of the fastest-growing economies in the world and has the largest youth population due to which it has become a major attraction for investors across the globe. However, with the earlier investment options offered to the foreigners/NRIs/OCIs, there were certain restrictions and limitations imposed on them. There was an investment limit and certain limitations with respect to the retention period were imposed. But with the introduction of Fully Accessible Route, the eligible investors can invest in specified securities without any limitation. Indian G-secs are now listed in the Global Bond Indices and has subsequently led to the inflow of stable foreign investment.
During the nationwide lockdown due to the outbreak of coronavirus, this will help to strengthen the country financially. This move of the RBI and Government of India will help the country attract more foreign investment.
Author: Ishita from Symbiosis Law School, Pune.
Editor: Arya Mittal from Hidayatullah National Law University, Raipur.
The increasing competitiveness in the contemporary industrial society has given rise to criminality and allied offences. The ethical and metaphysical integrity of trade and finance is hampered by such economic offences. One such offence is that of money laundering, which started as an activity to disguise the illegal origin of money by criminals, smugglers, traffickers etc. and has become an inescapable part of financial arrangements all over the world undermining the integrity of banking and financial services.
Recently a special court in Bombay dealing with offences related to money laundering allowed the banks to utilize the assets of fugitive offender Vijay Mallya to retrieve the amount of loans advanced to him before he fled the country in March 2016.
The recent order is covered under the Prevention of Money Laundering Act, 2002. The order would help to restore the reputation and credibility of banking system which was deeply maligned after Mallya fled the county.
The article seeks to discuss the country’s first fugitive economic offender Vijay Mallya’s case and also explain the Prevention of Money Laundering Act, 2002.
Money Laundering and its features
Section 3 of the Prevention of Money-Laundering Act, 2002 defines the activity of Money Laundering as “Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.”
It is an attempt to convert the illegal and unaccountable money into clean money, from a legitimate source of income. It is a criminal offense in which the money acquired is veiled as coming from a legitimised source.
The ‘proceeds of crime’ that is mentioned in the definition refers to the fact that money laundering is dependent on other crimes which are listed as ‘scheduled offense’.
The offense comes under a cognizable offence under which arrest could be made without a warrant.
Activities like supply of illegal arms, drug trafficking, prostitution or smuggling which can generate huge amounts of money is generally included in the offences of money laundering.
Money laundering involves a three stage mechanism; a usual modus operandi, to operate, by taking the following steps:
a) Placement: This stage involves introducing the illegal income into financial system through various activities like investing in real cash, setting up shell companies, disbursing money through multiple accounts etc.
b) Layering: In the second stage of money laundering, the money laundered is moved and spread around into various financial accounts like a bank or a business account. The process involves layering the money to hide the origin.
c)Integration: At this stage the money is so well ingrained into the system that the offender could use it as clean money.
The Directorate of Enforcement in Department of Revenue under Ministry of Finance is responsible for investigating cases dealing with money laundering.
Prevention of Money Laundering Act, 2002(PMLA, 2002)
The act was passed by parliament of India in 2002 and is the fundamental legal framework in India to battle the problem of money laundering. It came into effect from July 1, 2005 due to various lacunas in original bill.
Objective: The main objective of the legislation is to deal with the various facets of money laundering in India along with prevention of money laundering and confiscation of property related to offence of money laundering.
Jurisdiction: The act covers under its ambit all banks, mutual funds, insurance companies and all other financial institutions. Its provisions are applicable to RBI, SEBI AND IRDA.
FIU-IND: The Financial Intelligence Unit – India is the nodal agency monitoring the suspicious financial transactions in the country and deterring money laundering activities. It is a multi- disciplinary agency responsible for keeping a record of transactions and keeping a check on laundering.
Punishment: The Act provides that whosoever indulges in any activity associated with money laundering would be guilty of the offence and shall be punishable with rigorous imprisonment for 3-7 years or fine or Seizure of property and records and attachment of property obtained with the proceeds of crime. Punishment can be extended to 10 years in case of offences allied to Narcotic Drugs and Psychotropic Substance Act 1985.
Adjudication: The Adjudicating Authority is selected by the Central government and it decides whether the property seized is involved in offence of money laundering.
Court: The Central Government, in consultation with the Chief Justice of the High Court elect courts of session as special court for trial of offences related to money laundering.
Know Your Customer (KYC) norms: The banks under PMLA, 2002 were obligated to perform some measures for customer identification. It was to ensure smooth functioning of the system without suspicious transaction which was to be reported to authority. However the banks are obligated to keep the information strictly confidential.
The bill has been amended 4 times to keep it at par with the global norms of the legal legislation, the most recent being the 2019 amendment.
A special court in Mumbai dealing with offences related to money laundering has allowed a consortium of various banks led by State Bank of India to utilise seized movable belonging to fugitive businessman Vijay Mallya. The seized assets comprise securities such as shares of United Breweries Holdings Ltd and hold worth estimated at Rs 11,000 crore.
The order is covered under Prevention of Money Laundering Act, 2002. The banks represented by senior counsel Rajiv Patil filed a case against the proclaimed offender to recover the loans given to him. However the court adjourned the hearing and has allowed the affected parties to appeal to Bombay high court against the order till January 18.
Vijay Mallya, former Rajya Sabha member fled the country in 2016 after committing fraud and money laundering. He took loans from various banks and left the country without paying his debts. He has been living in UK since then and is facing extradition trial brought by India.
Last year in January, he was declared a fugitive economic offender (FEO) by the PMLA court under the Fugitive Economic Offenders Act, that too as the first person to be censored under the law.
The lenders want to liquidate assets to recover over Rs 6ooo crore, the amount which was lent to former liquor baron. The Directorate of Enforcement, which is supervising the case, declared to the special PMLA court in February 2019 that it had no objection to liquidation of financial assets.
However, the lawyers representing Vijay Mallya have objected to the move claiming that court is not the appropriate authority to deal with the issue. Instead they want liquidation of assets to be done before the Debt Recovery Tribunal, which is the proper authority.
Significance of current development
Money laundering is a serious threat to the reputation and integration of the financial and banking systems. The financial institutions and government are constantly looking for new approaches to curb money laundering and allied offences. To avert such grave threats, legislations like PMLA become essential to forestall such offences.
The instant order by the Mumbai special court proved that PMLA is not a redundant statute and a well-crafted tool for keeping a check on illegal and criminal activities. Such offences malign the reputation of the finance institutions in the country and have potential to erode a nation’s economic base.
It is necessary to curb the growing menace of money laundering expanding globally through such judgements. Laundering enables criminal activity to continue and by keeping a check on it, various criminal activities are prevented.
Conclusion: Way forward
Money Laundering is a serious crime which poses a lot of threat to economic and financial constitutions and has to be addressed earnestly. The government has already established comprehensive anti-money laundering mechanisms with Enforcement Directorate taking effective measures to investigate and prevent money laundering. Additionally, the judicial system has showed activism to uphold the veracity of financial structure.
However changing paradigms require more rapid approach towards money laundering and taking strict actions against those violating the financial mechanism. For instance, with the rapid advancement of technology, new forms of laundering are forthcoming which have to be dealt with effectively. Therefore, to have an effective anti-money laundering regime, more radical approach is required on a national as well as global level.
Author: Sakshi Sethi from Rajiv Gandhi National University Of Law, Patiala.
Editor: Ismat Hena from Faculty of Law, Jamia Millia Islamia.