Delhi High Court to consider plea for uniform banking code for forex transactions

The Delhi High Court on April 5 agreed to hear a public interest litigation plea which seeks a uniform banking code for foreign exchange transactions and has issued notice to the government’s ministries concerned on the issue.

The Delhi High Court has sought responses from the ministries of home affairs, finance, and law and justice on this plea filed by advocate and BJP leader Ashwini Kumar Upadhyay.

The PIL filed by Upadhyay urges the high court to direct the Union government to implement this uniform banking code and ensure that the domestic tools for instant money transfer are not used to wire funds from oversees. The banks, both domestic and Indian branches of foreign banks, must record all the details of foreign funds transferred into India and a direction to this effect must be made by the court, the plea prays further.

The rationale behind seeking these changes through a unified code, according to Upadhyay’s plea, is to “control funding to Separatists Fundamentalists Naxals Maoists Terrorists Traitors Conversion Mafias and Radical Organizations like SIMI, PFI etc.(sic)”

Use of Real Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT) and Instant Money Payment System (IMPS) for depositing foreign funds into India has a two-pronged adverse effect for India, according to this PIL. Such transactions harm “national interests of foreign exchange reserves of India” and may also be used to channel funds for separatists, fundamentalists, naxals, among others, Upadhyay’s petition argues.

Drawing a parallel with travel-related rules for entry into India, Upadhyay reasons that just as immigration rules are the same for all persons entering India, the rules for entry of foreign funds into India ought to be uniform too.

If his PIL succeeds, the effect will “control the menace of bribery, black money, benami transaction, tax evasion, money laundering, profiteering, grain hoarding, food adulteration, human trafficking…” Upadhyay tells the court in his petition while further listing a number of issues plaguing the country.

The high court is expected to hear the case in the last week of May after it granted the ministries time of four weeks to file their responses.