Date: 16 December, 2020
INSOLVENCY AND BANKRUPTCY CODE (IBC), 2016
This law has been passed to establish a unified framework that could resolve matters related to bankruptcy and insolvency. The technique adopted by IBC is the creditor-in-saddle approach, in which ‘resolution professionals’ take over the management of the affairs related to corporate debtors at the outset. As per this law, the accounts of people related to NPA and the wilful defaulters are debarred from the resolution process.
BANKING REGULATION ACT, 1949
This act has been amended to provide authority to the Reserve Bank of India (RBI) so that it can give guidelines to the Banks and under IBC it can initiate the insolvency resolution process.
FUGITIVE ECONOMIC OFFENDERS ACT, 2018
This Act was enacted on 21st April 2018. It was passed to prevent economic offenders from absconding from the country. The Special Court has all the powers under this Act to confiscate all assets and properties of the offenders who are charged with default over Rs. 100 crores and try to evade the charges by remaining outside the jurisdiction of Indian courts. It also disentitles the wrongdoer from filing any civil claim.
SARFAESI (SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENCFORCEMENT OF SECURITY INTEREST) ACT, 2002
This Act has been amended to include a provision for imprisonment of three months if in case the borrower does not provide the details of his assets and in case if the lender obtains the possession of the mortgaged property within 30 days. In 2014, the government approved the setting up of six new Debts Recovery Tribunals (DRT). In 2018, the minimum pecuniary limit to file a suit in DRT has been raised to Rs. 20 lakh from Rs. 10 lakh to ensure the effective disposal of cases.
LEGAL ENTITY IDENTIFIER (LEI)
RBI has recently introduced the Legal Entity Identifier (LEI) to prevent and check banking frauds. LEI was established because money laundering takes place through a large network of companies situated at different locations which makes it difficult to track the transactions of the companies.
YH MALEGAM COMMITTEE
YH Malegam Committee was formulated by RBI to look into rising instances of fraud. It aimed to look into matters of bad debts as well as the effectiveness of audits and the classification of bad loans.
NATIONAL FINANCIAL REPORTING AUTHORITY (NFRA)
NFRA had been formulated under Section 132 of the Companies Act, 2013. the central Government aimed to set an independent and separate regulatory authority that could assist in implementing the laws related to accounting and auditing.
The vulnerability to fraud has been heightened due to the advancement of technology in recent times. The challenge before respective agencies lies in the shape of capacity building, quality of investigation, support from experts The Government of India also passed the Information Technology Act, 2000, to provide for punishment and penalties in such cases.