HC RESTRAINS HUSBAND FROM PURSUING MATRIMONIAL CASE IN CANADA DURING PENDENCY OF DIVORCE PETITION FILED BY WIFE IN INDIA - Business Guardian
Connect with us

Policy&Politics

HC RESTRAINS HUSBAND FROM PURSUING MATRIMONIAL CASE IN CANADA DURING PENDENCY OF DIVORCE PETITION FILED BY WIFE IN INDIA

Published

on

It is in the fitness of things that the Delhi High Court in a learned, laudable, landmark and latest judgment titled Damini Manchanda v. Avinash Bhambhani in CS(OS) 13/2022 and cited in 2022 LiveLaw (Del) 636 pronounced just recently on July 8, 2022 has taken a serious view of a case wherein the husband deliberately avoided service in the divorce proceedings filed by his wife in India, refused to appear before the Court here and filed a separate divorce case in a Canadian court. The Single Judge Bench of Hon’ble Justice Amit Bansal passed an interim injunction against the husband restraining him from proceeding with the divorce suit filed by him before the Canadian Court. The Court was dealing with an application filed by the wife seeking an interim order restraining the defendant husband from proceeding with the divorce petition filed by him before the Canadian Court.

I.A. 566/2022 (O-XXXIX R-1 & 2 of CPC)

At the outset, this brief, brilliant and balanced oral judgment delivered by a Single Judge Bench of the Delhi High Court comprising of Hon’ble Justice Amit Bansal sets the ball rolling by first and foremost putting forth in para 1 that, “The present application was filed on behalf of the plaintiff seeking interim order restraining the defendant from proceeding with the divorce petition filed by him before the Superior Court of Justice, Ontario, Toronto, Canada (Canadian Court).”

To put things in perspective, the Bench then envisages in para 2 that, “It is the case of the plaintiff that the plaintiff has filed a divorce petition against the defendant before the Family Court, Saket, New Delhi on 16th December, 2020, which has been pending for over a year and the defendant has avoided service in the said matter. In order to harass the plaintiff, the defendant filed a divorce case in Canada on 13th December, 2021.”

Simply put, the Bench then states in para 3 that, “The aforesaid application came up before the Predecessor Bench on 12th January, 2022, when summons in the suit and notice in the present application were issued to the defendant. However, no ex parte interim injunction was granted at that stage.”

Be it noted, the Bench then observes in para 4 that, “The relevant observations by the Court on 12th January, 2022 are set out below: ―

8. Ms. Preeti Singh, learned counsel for the plaintiff, has submitted that urgent interim directions are required to be issued in this case. It is submitted that the parties stand in the relationship of husband and wife. Due to matrimonial disputes, the plaintiff had instituted proceedings for divorce by filing a case on 16th December, 2020 against the defendant, which is pending before the Family Court, Saket, New Delhi. Though summons were issued in that suit on 25th February, 2021, apparently, the defendant had not yet appeared before the learned Family Court either himself or through a pleader. It is further submitted that the defendant was, at that time, residing in India and also responded to a legal notice issued by the plaintiff, on 10th February, 2021 through a lawyer whose office is also in New Delhi. In that reply, the address of the defendant was affirmed to be E-28, Neb Valley, Sainik Farms, New Delhi-110068. It is submitted that, however, in September, 2021, the defendant shifted with his children to Toronto, Canada. Thereafter, on 13th December, 2021, he is stated to have filed a divorce case against the plaintiff in a court there.

9. Learned counsel for the plaintiff submits that permitting the continuation of the suit filed by the defendant before the Superior Court of Justice, Ontario, Toronto, Canada, would only lead to multiplicity of the proceedings as well as ambiguity. The learned counsel submitted that prejudice was being caused to the plaintiff inasmuch as she had opted for the jurisdiction of the Indian court first and it was only a year later that defendant had instituted the divorce proceedings in Canada. The learned counsel stressed that the larger issue was ambiguity inasmuch as the two courts could render conflicting decisions. Reliance has been placed on the judgment of this court in Harmeeta Singh v. Rajat Taneja, 2003 SCC OnLine Del 60 to submit that this Court had the jurisdiction to stay the proceedings before the court in Canada.

10. Having heard learned counsel in detail and considered the material placed on the record, this Court is of the view that no prima facie case has been disclosed for this Court to exercise its discretion in her favour to restrain the defendant from continuing with the divorce proceedings pending before the Superior Court of Justice, Ontario, Toronto, Canada.

11. It is to be noticed that though it was submitted by the learned counsel for the plaintiff that the parties are Indians and were married as per Hindu rites, at the time the plaintiff chose to file the divorce petition, she was residing in Canada i.e., 1166, Mcbride Avenue, Mississaunga Onatro, L5C 1M8, Canada. Interestingly, in the ‘Memo of Parties’, while the plaintiff is described as ‘D/o Om Prakash Manchanda, R/o. E-28, Neb Valley, Neb Sarai, Sainik Farm, New Delhi-110068’, it is also stated as “presently residing at 1166, Mcbride Avenue, Mississaunga Onatro, L5C 1M8, Canada”. Despite the averments in the plaint that the defendant has left for Canada and was presently residing there, the plaintiff has given the Delhi address i.e., E-28, Neb Valley, Sainik Farms, New Delhi-110068, again adding, presently at 2913-233 WEBB DR, Mississauga on L5B 0E8, Canada. In other words, presently both parties are residing in Canada and none of them is in India. Unlike in the case of Harmeeta Singh (supra), where the appellant Harmeeta Singh was found to have no possibility of attending the hearing in the USA on account of Visa problems, no such situation prevails here. The plaintiff is well situated to take care of her interests.

12. No ground is made out for grant of interim injunction at this stage.”

Needless to say, the Bench then mentions in para 5 that, “The aforesaid order was taken up in an appeal by the plaintiff.”

As we see, the Bench then discloses in para 6 that, “The Division Bench vide order dated 18th January, 2022 was pleased to dismiss the appeal filed on behalf of the plaintiff against order dated 12th January, 2022. The extract of the observations made by the Division Bench are set out hereinafter:

“3. It appears that the parties are having a matrimonial dispute. The appellant-wife first instituted the divorce proceeding before the Family Court, Saket, New Delhi. That proceeding was instituted on 16.12.2020.

4. The case of the appellant is that the respondent failed to appear before the Family Court and proceeded to Canada with the children, and, thereafter instituted the divorce proceedings in the Canadian court as aforesaid. In the aforesaid background, the appellant/plaintiff sought anti suit injunction against the respondent/defendant from proceeding with the divorce proceedings in Canada.

5. The learned Single Judge has noticed that both the parties are residing in Canada. Even in the divorce petition filed by the appellant/plaintiff, she has disclosed that at the time of filing of the same, she was residing in Canada. In response to our query, learned counsel for the appellant states that the parties were in Canada since the year 2018. It appears that they came to India for some time. Thereafter, both have returned to Canada.

6. In the aforesaid background, the learned Single Judge has not considered it appropriate to pass an ex parte, ad interim order of injunction to restrain the respondent/defendant from proceeding with his divorce petition.

7. The submission of learned counsel for the appellant is that the respondent/defendant may, in the meantime, obtain a decree for divorce from the Canadian court.

8. We have heard learned counsel for the appellant and perused the impugned order, as well as the documents placed on record, and we are not inclined to interfere with the impugned order, since the same is an ex parte, ad interim order. The application seeking injunction against the respondent/defendant i.e., LA. No. 566/2022 is still pending consideration, and has not yet been disposed of.

9. The submission that the Canadian Court may proceed to decide the divorce petition filed before it does not impress us, for the reason, that both the parties have filed their respective petitions for divorce. It is not that the appellant is opposing grant of divorce, and wishes to preserve the matrimonial relationship.

10. The submission that the appellant-wife may lose out in the matter of grant of maintenance and permanent alimony, also does not impress us, since those are aspects, which are to be considered by the competent courts- whether in Canada or in India.””

As we see, the Bench then reveals in para 7 that, “Subsequently, an application for early hearing, being I.A. No.9507/2022, was filed on behalf of the plaintiff. Annexed thereto, was a ‘Case Conference Brief’ (Brief) filed on behalf of the defendant before the Canadian Court. Paragraph 8 of the said Brief is set out below:

“8. On January 12, 2022, Justice Asha Menon made a decision in the High Court of Delhi. This decision is attached at Tab A. At para 10, her honour states: “ … this Court is of the view that no prima facie case has been disclosed for this Court to exercise its discretion in her favour to restrain the defendant from continuing with the divorce proceedings pending before the Superior Court of Justice, Ontario, Toronto, Canada.” Justice Menon did not find grounds to grant an injunction against the Applicant continuing litigation in Ontario. The Indian court did not assume jurisdiction of this matter, and Her Honour further comments that both parties reside in Canada and are well situated to take care of their interests there.””‖

It is a no-brainer that the Bench then lays bare in para 8 that, “A perusal of the aforesaid paragraph clearly suggests that the defendant is well aware of the present proceedings and despite that, he has deliberately chosen not to appear before this Court.”

To be sure, the Bench then specifies in para 9 that, “Along with the said aforesaid Brief, opinion of the Indian advocate of the defendant has been attached, wherein it has been stated that the application filed on behalf of the plaintiff seeking to restrain the defendant from proceeding further in the divorce case in Canada was dismissed. The relevant part of the opinion is extracted below: ―

“A perusal of both the orders reveal that the Ld. Single Judge as well as the Ld. Division Bench of the Hon’ble Delhi High Court noticed the pendency of the divorce proceedings initiated by Mrs. Damini Manchanda and keeping in view of the fact that the Divorce Proceedings were pending, the Applications filed by Mrs. Damini Manchanda seeking to restrain Mr. Avinash Bhambhani from proceeding with his case in Canada was dismissed.””

For sake of clarity, the Bench then notes in para 10 that, “This is clearly an erroneous statement issued by the advocate of the defendant. Records of the case show that though the Court did not grant exparte ad interim injunction on 12th January, 2022, the application was not dismissed by this Court and notice was issued to the defendant. In fact, this very application is now being considered by me. Even the Division Bench of this Court while dismissing the appeal filed on behalf of the plaintiff had made the following observations:

“11. Therefore, we dismiss this appeal. However, we make it clear that the observations made by us aforesaid, have been made only for the purpose of dealing with the present appeal, and the same shall not come in the way of the appellant in pursuing her suit and LA. No. 566/2022, and the learned Single Judge would not be influenced by our observations while deciding, either the interim application or the suit.””

It would be instructive to note that the Bench then minces no words to hold forthright in para 11 that, “In the abovesaid legal opinion, the above paragraph from the order of the Division Bench has been selectively quoted in a manner to justify the legal opinion. The underlined portions of the order have been significantly omitted in the legal opinion. This Court is shocked that a counsel practicing in India has given such an opinion which is completely contrary to the record of the case and that too by misquoting and selectively quoting the observations made by the Division Bench of this Court.”

Furthermore, the Bench then states in para 12 that, “Counsel for the plaintiff has relied upon the judgment of the Supreme Court in Madhavendra L Bhatnagar V. Bhavna Lall, (2021) 2 SCC 775 to submit that the Indian Courts can pass an anti-suit injunction order against the defendant pursuing matrimonial proceedings before a Foreign Court when matrimonial proceedings have also been filed before competent courts in India.”

In the context of this ruling, the Bench then lays bare in para 13 that, “The relevant observations of the Supreme Court in the aforesaid judgment are set out below: ―

“6. In view of this observation, the appellant apprehends that some drastic order is likely to be passed by the Superior Court of Arizona at the instance of respondent–wife. Notably, the respondent is bent upon precipitating the matter before the court at Arizona, despite the appellant having resorted to proceedings for divorce as well as custody of the minor child in India before the Court at Bhopal in the State of Madhya Pradesh. Those proceedings are still pending, where the respondent has had entered appearance after the subject application was moved by the appellant.‖

****

10. Accordingly, we have no hesitation in setting aside the impugned decisions and to grant interim relief as prayed in the application filed before the Court at Bhopal as reproduced above, including to restrain the respondent from proceeding with the pending suit instituted by her in the Superior Court of Arizona or to file any other proceedings, including interim application(s) in any proceedings hereafter (except in the proceedings pending in Court at Bhopal) until further orders to be passed by the Court at Bhopal.

11. During the hearing, a disconcerting aspect has been brought to our notice by the counsel for the appellant. In the communication or response given by the respondent in reference to the service of notice issued by this court in the present appeal, it has been asserted by the respondent that her Attorney in India had advised her that the appeal pending before this court will not succeed at all. We fail to understand as to how an advocate appearing in the matter or instructing the litigant who is party before the Supreme Court of India would be in a position to prejudge the outcome of the proceedings or if we may say so speculate about the outcome thereof. Prima facie, this, in our opinion, is bordering on professional misconduct and needs to be proceeded with.”

There can be no gainsaying that the Bench then rightly states in para 14 that, “The above quoted observations of the Supreme Court would be fully applicable in the present case. In the present case also, the defendant, while avoiding service in the divorce proceedings filed in India and in the present suit, has precipitated the divorce case before the Canadian Courts. Further, in the present case also, the defendant has filed a legal opinion before the Canadian Courts, which is ex facie erroneous and contrary to the records of the present case.”

Quite ostensibly, the Bench then observes in para 15 that, “It is also clear from the Brief filed on behalf of the plaintiff that the defendant is well aware of the present proceedings and despite that, has chosen not to appear before this Court. As per the record of the Registry, summons in the suit and notice in the application have also been issued to the defendant through email and WhatsApp. An affidavit of service has also been filed on behalf of the plaintiff stating that the summons as well as the notice in the application has been sent to the defendant by way of email.”

What’s more, the Bench then states in para 16 that, “In the present case, the divorce petition in India was filed on behalf of the plaintiff on 16th December, 2020 and notice was issued to the defendant on 25th February, 2021. At that point of time, the defendant was residing in India. It has been stated on behalf of the defendant in the Brief that the defendant left India for Canada along with the children only in September, 2021 and immediately thereupon, filed a divorce petition in Canada.”

It cannot be glossed over that the Bench then notes in para 17 that, “The notice was served on the defendant at the same address that was given in the reply dated 10th February, 2021 sent on behalf of the defendant’s advocate to a legal notice sent by the plaintiff’s advocate. However, the defendant managed to avoid service in the divorce petition before the Saket Court, New Delhi. Defendant has not been appearing for the divorce petition filed on behalf of the plaintiff in India.”

As a corollary, the Bench then mentions in para 18 that, “It is clear from the above, that the defendant has deliberately avoided service in the divorce petition in order to file divorce case before the Canadian Courts. Perhaps, the defendant believed that the matrimonial laws in Canada would be more advantageous to him as compared to the Indian law.”

Quite frankly, the Bench then observes in para 19 that, “Admittedly, the plaintiff and the defendant were married as per Hindu rites and ceremonies in New Delhi on 21st December, 2002 and continued to reside in Delhi till April, 2018. Therefore, it cannot be denied that the Family Courts in Delhi would have the jurisdiction to entertain the divorce case.”

It is worth noting that the Bench then underscores in para 20 that, “The Court takes a serious view of the matter that the defendant has deliberately avoided service in the divorce proceedings in India, but continues to pursue the divorce case filed by him before the Canadian Court. Despite service in the present matter and being aware of the present proceedings, the defendant refuses to appear before this Court.”

While citing the relevant case law, the Bench then observes in para 21 that, “The Supreme Court in Modi Entertainment Network and Another V. W.S.G. Cricket Pte. Ltd., (2003) 4 SCC 341, has laid down, inter alia, the following principles for grant of anti-suit injunction:

“24. From the above discussion the following principles emerge:

(1) In exercising discretion to grant an anti-suit injunction the court must be satisfied of the following aspects:

(a) the defendant, against whom injunction is sought, is amenable to the personal jurisdiction of the court;

(b) if the injunction is declined, the ends of justice will be defeated and injustice will be perpetuated; and

(c) the principle of comity — respect for the court in which the commencement or continuance of action/proceeding is sought to be restrained — must be borne in mind.”

Quite analytically, the Bench then holds in para 22 that, “Applying the aforesaid principles to the facts of the present case, the defendant is amenable to jurisdiction of this court. Further, in my view, ends of justice will be defeated if the anti-suit injunction is not granted. The defendant has deliberately chosen not to appear in the present proceedings as well as the divorce proceedings filed on behalf of the plaintiff in India and at the same time pursuing the divorce proceedings before the Canadian Courts.”

Quite forthrightly, the Bench then observes in para 23 that, “A prima facie case is made out on behalf of the plaintiff. Balance of convenience is in favour of the plaintiff and against the defendant. The multiplicity of divorce proceedings before the Courts in India and Canada could result in conflicting decisions.”

Quite naturally, the Bench then holds in para 24 that, “Accordingly, an interim injunction is passed against the defendant restraining the defendant from proceeding with the divorce suit filed by him before the Superior Court of Justice, Ontario, Toronto, Canada.”

It is then held in para 25 that, “Accordingly, the application stands disposed of.”

I.A. 7958/2022 (u/S 151 of CPC)

No doubt, the Bench then rightly directs in para 26 that, “In view of the orders passed above, no orders are required to be passed in the present application.”

CS(OS) 13/2022 ‖

It would be germane to note that the Bench then directs in para 28 that, “In view of the discussion above, the defendant is deemed to be served. Since he has failed to enter appearance, he is proceeded against ex-parte.”

Finally, the Bench then aptly concludes by holding in para 29 that, “List before the Joint Registrar for further proceedings on 12th September, 2022.”

In sum, we thus see that the Delhi High Court very rightly restrains the husband from pursuing the matrimonial case in Canada during pendency of divorce petition filed by wife in India. We thus see that the Court takes a very serious view of the matter that the defendant has deliberately avoided service in the divorce proceedings in India, but continues to pursue the divorce case filed by him before the Canadian Court. We thus see that the defendant is rightly restrained by the Delhi High Court from proceeding with the divorce suit that was filed by him before the Superior Court of Justice, Ontario, Toronto, Canada. No denying it!

Sanjeev Sirohi, Advocate

The Daily Guardian is now on Telegram. Click here to join our channel (@thedailyguardian) and stay updated with the latest headlines.

For the latest news Download The Daily Guardian App.

Policy&Politics

Govt extends date for submission of R&D proposals

Published

on

The Government has extended the deadline for submission of proposals related to R&D scheme under the National Green Hydrogen Mission. The R&D scheme seeks to make the production, storage, transportation and utilisation of green hydrogen more affordable. It also aims to improve the efficiency, safety and reliability of the relevant processes and technologies involved in the green hydrogen value chain. Subsequent to the issue of the guidelines, the Ministry of New & Renewable Energy issued a call for proposals on 16 March, 2024.

While the Call for Proposals is receiving encouraging response, some stakeholders have requested more time for submission of R&D proposals. In view of such requests and to allow sufficient time to the institutions for submitting good-quality proposals, the Ministry has extended the deadline for submission of proposals to 27th April, 2024.

The scheme also aims to foster partnerships among industry, academia and government in order to establish an innovation ecosystem for green hydrogen technologies. The scheme will also help the scaling up and commercialisation of green hydrogen technologies by providing the necessary policy and regulatory support.

The R&D scheme will be implemented with a total budgetary outlay of Rs 400 crore till the financial year 2025-26. The support under the R&D programme includes all components of the green hydrogen value chain, namely, production, storage, compression, transportation, and utilisation.

The R&D projects supported under the mission will be goal-oriented, time bound, and suitable to be scaled up. In addition to industrial and institutional research, innovative MSMEs and start-ups working on indigenous technology development will also be encouraged under the Scheme.

Continue Reading

Policy&Politics

India, Brazil, South Africa to press for labour & social issues, sustainability

Published

on

The Indian delegation also comprises Rupesh Kumar Thakur, Joint Secretary, and Rakesh Gaur, Deputy Director from the Ministry of Labour & Employment.

India, on Thursday, joined the G20’s two-day 2nd Employment Working Group (EWG) meeting under the Brazilian Presidency which is all set to address labour, employment and social issues for strong, sustainable, balanced and job-rich growth for all. India is co-chairing the 2nd EWG meeting, along with Brazil and South Africa, and is represented by Sumita Dawra, Secretary, Labour & Employment.

The Indian delegation also comprises Rupesh Kumar Thakur, Joint Secretary, and Rakesh Gaur, Deputy Director from the Ministry of Labour & Employment. India has pointed out that the priority areas of the 2nd EWG at Brasilia align with the priority areas and outcomes of previous G20 presidencies including Indian presidency, and commended the continuity in the multi-year agenda to create lasting positive change in the world of work. This not only sustains but also elevates the work initiated by the EWG during the Indian Presidency.

The focus areas for the 2nd EWG meeting are — creating quality employment and promoting decent labour, addressing a just transition amidst digital and energy transformations, leveraging technologies to enhance the quality of life for al and the emphasis on gender equity and promoting diversity in the world of employment for inclusivity, driving innovation and growth. On the first day of the meeting, deliberations were held on the over-arching theme of promotion of gender equality and promoting diversity in the workplace.

The Indian delegation emphasized the need for creating inclusive environments by ensuring equal representation and empowerment for all, irrespective of race, gender, ethnicity, or socio-economic background. To increase female labour force participation, India has enacted occupational safety health and working conditions code, 2020 which entitles women to be employed in all establishments for all types of work with their consent at night time. This provision has already been implemented in underground mines.

In 2017, the Government amended the Maternity Benefit Act of 1961, which increased the ‘maternity leave with pay protection’ from 12 weeks to 26 weeks for all women working in establishments employing 10 or more workers. This is expected to reduce the motherhood pay gap among the working mothers. To aid migrant workers, India’s innovative policy ‘One Nation, One Ration Card’ allows migrants to access their entitled food grains from anywhere in the Public Distribution System network in the country.

A landmark step in fostering inclusion in the workforce is the e-Shram portal, launched to create a national database of unorganized workers, especially migrant and construction workers. This initiative, providing the e-Shram card, enables access to benefits under various social security schemes.

The portal allows an unorganized worker to register himself or herself on the portal on self-declaration basis, under 400 occupations in 30 broad occupation sectors. More than 290 million unorganized workers have been registered on this portal so far.

Continue Reading

Policy&Politics

India to spend USD 3.7 billion to fence Myanmar border

Published

on

India plans to spend nearly $3.7 billion to fence its 1,610-km (1,000-mile) porous border with Myanmar within about a decade, said a source with direct knowledge of the matter, to prevent smuggling and other illegal activities. New Delhi said earlier this year it would fence the border and end a decades-old visa-free movement policy with coup-hit Myanmar for border citizens for reasons of national security and to maintain the demographic structure of its northeastern region.

A government committee earlier this month approved the cost for the fencing, which needs to be approved by Prime Minister Narendra Modi’s cabinet, said the source who declined to be named as they were not authorised to talk to the media. The prime minister’s office and the ministries of home, finance, foreign affairs and information and broadcasting did not immediately respond to an email seeking comment.

Myanmar has so far not commented on India’s fencing plans. Since a military coup in Myanmar in 2021, thousands of civilians and hundreds of troops have fled from there to Indian states where people on both sides share ethnic and familial ties. This has worried New Delhi because of risk of communal tensions spreading to India. Some members of the Indian government have also blamed the porous border for abetting the tense situation in the restive north-eastern Indian state of Manipur, abutting Myanmar.

For nearly a year, Manipur has been engulfed by a civil war-like situation between two ethnic groups, one of which shares lineage with Myanmar’s Chin tribe. The committee of senior Indian officials also agreed to build parallel roads along the fence and 1,700 km (1,050 miles) of feeder roads connecting military bases to the border, the source said.

The fence and the adjoining road will cost nearly 125 million rupees per km, more than double that of the 55 million per km cost for the border fence with Bangladesh built in 2020, the source said, because of the difficult hilly terrain and the use of technology to prevent intrusion and corrosion.

Continue Reading

Policy&Politics

ONLY 2-3% RECOVERED FROM $2-3 TN ANNUAL ILLEGAL TRADE THROUGH BANKING: INTERPOL

Published

on

However, Stock highlighted the enormity of the challenge, noting that between 40% and 70% of criminal profits are reinvested, perpetuating the cycle of illicit financial activity.

In a press briefing held on Wednesday, Interpol Secretary General Jurgen Stock unveiled alarming statistics regarding the extent of undetected money laundering and illegal trade transactions plaguing the global banking network. Stock revealed that over 96% of the money transacted through this network remains undetected, with only 2-3% of the estimated USD 2-3 trillion from illegal trade being tracked and returned to victims.

Interpol, working in conjunction with law enforcement agencies and private financial sectors across its 196 member countries, is committed to combating the rising tide of fraud perpetrated by illicit traders. These criminal activities encompass a wide spectrum, including drug trafficking, human trafficking, arms dealing, and the illicit movement of financial assets.

Stock emphasized the urgent need to establish mechanisms for monitoring transactions within the global banking network. Currently, efforts are underway to engage banking associations worldwide in setting up such a framework. However, Stock highlighted the enormity of the challenge, noting that between 40% and 70% of criminal profits are reinvested, perpetuating the cycle of illicit financial activity. The lack of real-time information sharing poses a significant obstacle to law enforcement agencies in their efforts to combat money laundering and illegal trade.

Stock underscored the role of Artificial Intelligence (AI) in exacerbating this problem, citing its use in voice cloning and other fraudulent activities. Criminal organizations are leveraging AI technologies to expand their operations and evade detection on a global scale. Stock emphasized the importance of enhanced cooperation between law enforcement agencies and private sector banking groups. Realtime information sharing is crucial in the fight against illegal wealth accumulation.

Drawing inspiration from initiatives such as the “Singapore Anti-Scam Centre,” Stock called for the adoption of similar models in other countries to strengthen the collective response to financial crimes. In conclusion, Stock’s revelations underscore the pressing need for concerted action to combat global financial crimes. Enhanced cooperation between public and private sectors, coupled with innovative strategies for monitoring and combating illicit transactions, is essential to safeguarding the integrity of the global financial system.

Continue Reading

Policy&Politics

FM defends Atal Pension Scheme, highlights guaranteed returns

Published

on

Finance Minister Nirmala Sitharaman defended the Atal Pension Yojana (APY) against Congress criticism, asserting its design based on choice architecture and a guaranteed minimum 8% return. She emphasized the scheme’s opt-out feature, facilitating automatic premium continuation unless subscribers choose otherwise, promoting retirement savings. Sitharaman countered Congress allegations of coercion, stating the APY’s guaranteed returns irrespective of market conditions, supplemented by government subsidies.

Responding to Congress’s claim of scheme misuse, Sitharaman highlighted its intended beneficiaries – the lower-income groups. She criticized Congress for its alleged elitist mindset and emphasized the scheme’s success in targeting the needy. Sitharaman accused Congress of exploiting vote bank politics and coercive tactics, contrasting it with the APY’s transparent framework. The exchange underscores the political debate surrounding social welfare schemes, with the government defending its approach while opposition parties raise concerns about implementation and efficacy.

Finance Minister Nirmala Sitharaman’s robust defense of the Atal Pension Yojana (APY) against Congress criticism highlights the ongoing debate over social welfare schemes in India. Sitharaman’s assertion of the APY’s design principles, including its opt-out feature and guaranteed minimum return, underscores the government’s commitment to promoting retirement savings among lower-income groups. The Atal Pension Yojana, named after former Prime Minister Atal Bihari Vajpayee, was launched in 2015 to provide pension benefits to workers in the unorganized sector. It aims to address the significant gap in pension coverage among India’s workforce, particularly those employed in informal and low-income sectors. The scheme offers subscribers fixed pension amounts ranging from Rs. 1,000 to Rs. 5,000 per month, depending on their contribution and age at entry, after attaining the age of 60. Sitharaman’s response comes after Congress criticism alleging the APY’s inefficacy and coercive tactics in enrolment.

Congress General Secretary Jairam Ramesh described the scheme as poorly designed, citing instances of subscribers dropping out due to unauthorized account openings. However, Sitharaman refuted these claims, emphasizing the APY’s transparent and beneficiary-oriented approach. The finance minister’s defense focuses on three key aspects of the APY: Choice Architecture: Sitharaman highlights the opt-out feature of the APY, which automatically continues premium payments unless subscribers choose to discontinue.

This design element aims to encourage long-term participation and ensure consistent retirement savings among subscribers. By simplifying the decision-making process, the scheme seeks to overcome inertia and promote financial discipline among participants. Guaranteed Minimum Return: Sitharaman underscores the APY’s guarantee of a minimum 8% return, irrespective of prevailing interest rates. This assurance provides subscribers with confidence in the scheme’s financial viability and incentivizes long-term savings.

The government’s commitment to subsidizing any shortfall in actual returns further strengthens the attractiveness of the APY as a retirement planning tool. Targeting the Needy: Sitharaman defends the predominance of pension accounts in lower income slabs, arguing that it reflects the scheme’s successful targeting of its intended beneficiaries – the poor and lower-middle class. She criticizes Congress for its alleged elitist mindset and suggests that the party’s opposition to welfare schemes like the APY stems from a disconnect with the needs of marginalized communities. Sitharaman’s rebuttal also addresses broader political narratives surrounding social welfare policies in India.

She accuses Congress of exploiting vote bank politics and coercive tactics, contrasting it with the transparent and inclusive framework of the APY. The exchange underscores the ideological differences between the ruling Bharatiya Janata Party (BJP) and the opposition Congress, with each side advocating for their vision of social welfare and economic development. In addition to defending the APY, Sitharaman’s remarks shed light on the broader challenges and opportunities facing India’s pension sector.

Despite significant progress in expanding pension coverage through schemes like the APY, the country still grapples with issues such as financial literacy, informal employment, and pension portability. Addressing these challenges requires a multifaceted approach involving government intervention, private sector participation, and civil society engagement.

As India strives to achieve its vision of inclusive and sustainable development, initiatives like the APY play a crucial role in promoting economic security and social equity. Sitharaman’s defense of the scheme underscores the government’s commitment to addressing the needs of vulnerable populations and ensuring their financial well-being in the long run.

Continue Reading

Economic

Regulatory steps will make financial sector strong, but raise cost of capital

Published

on

India’s financial system regulator, the Reserve Bank of India (RBI), is demonstrating a serious commitment to improving governance and transparency at finance companies and banks, with the RBI’s recent measures aimed at curtailing lenders’ overexuberance, enhancing compliance culture and safeguarding customers.

While the global ratings firm has appreciated the RBI’s “diminishing tolerance for non-compliance, customer complaints, data privacy, governance, know-your-customer (KYC), and anti-money laundering issues”, it has cautioned that increased regulatory risk could impede growth and raise the cost of capital for financial institutions. “Governance and transparency are key weaknesses for the Indian financial sector and weigh on our analysis. The RBI’s new measures are creating a more robust and transparent financial system,” says S&P Global Credit Analyst, Geeta Chugh. “India’s regulator has underscored its commitment to strengthening the financial sector. The drawback will be higher capital costs for institutions,” Chugh cautions.

The RBI measures include restraining IIFL Finance and JM Financial Products from disbursing gold loan and loans against shares respectively and asking Paytm Payments Bank (PPBL) to stop onboarding of new customers. Earlier in December 2020, the RBI suspended HDFC Bank from sourcing new credit card customers after repeated technological outages. These actions are a departure from the historically nominal financial penalties imposed for breaches, S&P Global notes.

Besides, as the global agency points out, the RBI has decided to publicly disclose the key issues that lead to suspensions or other strict actions against concerned entities and become more vocal in calling out conduct that it deems detrimental to the interests of customers and investors. “We believe that increased transparency will create additional pressure on the entire financial sector to enhance compliance and governance practices,” adds Chugh. The global agency has also lauded the RBI’s recent actions demonstrating scant tolerance for any potential window-dressing of accounts.

These actions include the provisioning requirement on alternative investment funds that lend to the same borrower as the bank finance company. Amidst the possibility of some retail loans, such as personal loans, loans against property, and gold loans getting diverted to invest in stock markets and difficulty of ascertaining the end-use of money in these products, S&P Global underlines the faith of market participants that the RBI and market regulator, the Securities and Exchange Board of India, want to protect small investors by scrutinizing these activities more cautiously.

On the flip side, at a time of tight liquidity, the RBI’s new measures are likely to limit credit growth in fiscal 2025 (year ending March 2025). “We expect loan growth to decline to 14 per cent in fiscal 2025 from 16 per cent in fiscal 2024, reflecting the cumulative impact of all these actions,” says Chugh. The other side of the story is that stricter rules may disrupt affected entities and increase caution among fintechs and other regulated entities and the RBI’s decision to raise risk weights on unsecured personal loans and credit cards may constrain growth. Household debt to GDP in India (excluding agriculture and small and midsize enterprises) increased to an estimated 24 per cent in March 2024 from 19 per cent in March 2019. Growth in unsecured loans has also been excessive and now forms close to 10 per cent of total banking sector loans.

Continue Reading

Trending