Exclusive: Govt likely to decriminalise provisions in 5 Acts administered by RBI

The inter-ministerial committee consists of senior officials from the finance ministry, NITI Aayog, Department for Promotion of Industry and Internal Trade (DPIIT), etc. The committee has been tasked with accelerating the identification of provisions that can be decriminalised in various laws.

ALSO READ: MC Exclusive | Union Budget may decriminalise over 100 provisions to boost ease of doing business

What does it imply?

Decriminalising these provisions will help the government to replace many offences that involve imprisonment with just a monetary penalty to boost ease-of-doing business initiatives and save time and cost for both the government and businesses.

Modi government 2.0 had undertaken a significant effort to decriminalise various business and economic provisions to improve ease of doing business.

The Jan Vishwas Bill, which was passed in Parliament during Monsoon session 2023, decriminalised 183 provisions in 42 different laws. The Bill serves as a guiding principle for upcoming amendments in various laws.

The primary rationale behind these decriminalisation efforts is to enhance the business environment in India by reducing the compliance burden and the fear of criminal prosecution for minor or technical infractions. Overall, it represents a significant step towards improving the regulatory landscape for businesses in India, he said.

The decriminalisation of Acts administered by the RBI is likely to be a part of the next edition of the Jan Vishwas Bill, he added.

The government is also likely to decriminalise certain provisions of the Income-Tax Act.  The Central Excise Act and the Central Goods and Services Tax Act are also under review, another government official had told Moneycontrol earlier.

“The proposed move, if it comes to fruition, shall also signal India’s shift towards a more pragmatic and less punitive regulatory approach, which shall enhance the predictability and stability of the legal environment for businesses. This step shall boost businesses, ultimately making India a more attractive destination for both domestic and international investors,” Bharath Gangadharan, Counsel, SKV Law Offices, told Moneycontrol.

The proposal to decriminalise provisions in financial statutes is consistent with the steps taken to decriminalise provisions in other statutes starting with the Companies Act.

"Decriminalisation will enable resolution of contraventions without criminal prosecutions and help in timely closure of matters allowing companies to move forward with their businesses,” L Viswanathan, Senior Partner, Cyril Amarchand Mangaldas, told Moneycontrol.

The primary rationale behind these efforts is to enhance the business environment in India by reducing the compliance burden and the fear of criminal prosecution for minor or technical infractions.

"While the exact provisions to be amended have not been disclosed, it is clear that the goal is to ensure ease of doing business and to create a robust and business-friendly regulatory landscape,” Soumen Mohanty, Partner, AQUILAW, told Moneycontrol.

Auditors and key personnel of companies are held liable to imprisonment under RBI Act 1934 which is a deterrent for experts to participate in sectors monitored by RBI. The attempt to explore meaningful mechanisms instead of imprisonment may bring domain experts, talented professionals and stakeholders to freely enter into segments bordering finance, banking and fintech, Sunayana Basu Mallik, Partner, King Stubb & Kasiva, Advocates & Attorneys, said.

"The changes in Coin Act 2011 are needed as the country has transitioned into digital payment,” Mallik told Moneycontrol.