The Department of Financial Services, under the Ministry of Finance, is proposing to decriminalise certain minor economic offences under specific laws. The Finance Ministry also seeks feedback from various stakeholders including state governments, private sectors, NGOs and the members of the public.
The suggested modifications include certain economic offences under the Banking Regulation Act, Negotiable Instruments Act, Unregulated Deposit Scheme Act, RBI Act and other laws.
Several laws provide for imprisonment in case of specific acts or failure to fulfil the requirements of law. For example, the Negotiable Instruments Act holds a person guilty of an offence for cheque bounce and dishonour. The offender could be liable for imprisonment for a term extending up to two years. The Finance Ministry suggests decriminalisation of the offence.
The proposals seek to improve the judicial system in India and enable ease of doing business. The judicial system has disputes pending at different levels. The length of time involved in resolution to conflicts and the legal uncertainty negatively affects the ease of doing business.
The Ministry also cited judicial reforms as part of the COVID-19 response strategies to revive business and economic growth. The below principles to be borne in mind while reclassifying criminal offences into compoundable offences:
- Reduce the burden on businesses and encourage investment into the country.
- Promote economic growth, public interest and national security.
- Evaluate non-compliances from the perspective of an intention to commit fraud or crime, rather than negligence.
- The repetitive nature of the non-compliance.
The business community could positively receive the proposals. The Ministry has put a deadline of 23 June 2020 to provide suggestions or comments on the proposals.
For any clarifications/feedback on the topic, please contact the writer at email@example.com
I am a Chartered Accountant by profession. I specialise in personal taxes and corporate income tax matters. I am an avid reader and track developments in financial markets, economy and other market developments.