Woman Can Be Granted Bail For Non Bailable Offence Even If It Is Punishable With Life Sentence/Death Sentence: Karnataka HC - Business Guardian
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Woman Can Be Granted Bail For Non Bailable Offence Even If It Is Punishable With Life Sentence/Death Sentence: Karnataka HC

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While explicitly observing that it is not the law that bail should always be denied in a case where the offence punishable is of death or life imprisonment, the Karnataka High Court has as recently as on May 12, 2022 in a recent, refreshing, robust and rational judgment titled Nethra vs State of Karnataka in Criminal Petition No. 2306 of 2022 and cited in 2022 LiveLaw (Kar) 169 granted bail to a woman accused of murdering her husband. A single Judge Bench of Justice M Nagaprasanna allowed the petition filed by one Nethra and granted her bail relying on Section 437 of the Criminal Procedure Code (CrPC). It must also be mentioned here that the Court made it clear that in terms of Section 437 of the CrPC, bail can be granted in a non-bailable offence on three circumstances as depicted in the proviso, (i) a person below 16 years of age, (ii) a woman and (iii) a person who is sick or infirm.

To start with, this brief, brilliant, bold and balanced judgment authored by a single Judge Bench comprising of Justice M Nagaprasanna of Karnataka High Court sets the ball rolling by first and foremost putting forth in para 1 that, “The petitioner is before this Court seeking enlargement on bail in C.C.No.252 of 2022 arising out of Crime No.530 of 2021 registered for offences punishable under Section 302, 120B and 34 of the IPC, it having been turned down by the Principal District and Sessions Judge, Bangalore Rural in Criminal Miscellaneous No.2009 of 2021, on 17.02.2022.”

To put things in perspective, the Bench then while briefly stating the facts envisages in para 3 that, “The facts in brief are as follows:-

The petitioner is accused No.1. It is the case of the prosecution that on 07-11-2021 at about 1.30 a.m., the complainant, father of the deceased registers a complaint for offences punishable under Section 302 of the IPC, which becomes a FIR in Crime No.530 of 2021. The complaint was that he had two daughters and a son who are all married and his two daughters are no more. His son Palar Swamy was into real estate business. He had two children from the wedlock. About 6 years ago his son Palar Swamy had married one Nethra, the petitioner herein allegedly without the knowledge of his family and had also a child from the said marriage. His son had set up a house in a different locality to reside with the petitioner and was also visiting the house of the complainant. Three years prior to the incident, the son Palar Swamy had purchased two acres of land and developed the same into sites. He had constructed a house in the said developed sites and was residing there with his alleged second wife – the petitioner. The purchase and decision to reside with the second wife became a subject matter of quarrel between the members of the family. It is the case of the complainant that on 06-11-2021, Palar Swamy came to the house of the complainant and had enquired about his health and on the same day, the complainant had tried to call Palar Swamy after 11 p.m. after his dinner but Palar Swamy had not answered the calls. Apprehending some problem for his son, the complainant goes to the house of Palar Swamy at about 12.10 (night) and found the door opened and the petitioner who was holding some weapon in her hand ran away seeing him. Later, the complainant finds his son lying dead on the bed in his room and his head was bleeding. This was narrated in the complaint and a case of murder was registered against the petitioner and one Vijay Kumar, son of petitioner’s sister. On registration of the crime, the petitioner was taken into judicial custody and is in the custody from 08-11-2021. On getting arrested, the petitioner moved an application for bail under Section 439 of the Cr.P.C. during the pendency of investigation itself. Bail application was not considered. The Police after investigation filed their final report/charge sheet on 25-01-2022. The application for bail was taken up later on 17.02.2022 and dismissed notwithstanding the fact that charge sheet had been filed in the matter on the ground that the offence committed was punishable with death or life imprisonment. Rejection of the application is what drives the petitioner to this Court in the subject petition.”

Needless to say, the Bench then observes in para 6 that, “I have given my anxious consideration to the submissions made by the respective learned counsel and peruse the material on record.”

It would be germane to note that the Bench then specifies in para 7 that, “The afore-quoted chain of events is not in dispute. The petitioner is the alleged second wife of the deceased as is also borne out from the records. Quarrel between the wife and the husband is also a matter that is on record. There are no eye witness to the incident is again borne out from the records. Therefore, it is a case where the prosecution has to prove the offence beyond all reasonable doubt, that the petitioner has actually committed murder of the deceased by a weapon. It is also the material on record that quarrel between the husband and the wife took place for the reason that the deceased had pestered the petitioner to have physical relationship with one of his friends in his office and further on 06-11-2021, when the petitioner had asked her husband with whom he was going to travel outside, the answer was that he was travelling with other girls, this again resulted in serious quarrel between the two and the result of quarrel appears to be the reason behind the gruesome act. It is also a matter of record that the petitioner herself went and surrendered before the Police.”

Briefly stated, the Bench then most remarkably after elaborating on Section 437 of CrPC goes on to state aptly in para 8 that, “In terms of Section 437 of the Cr.P.C. bail can be granted in a non-bailable offence on three circumstances as depicted in the proviso, (i) being a person below 16 years of age, (ii) a woman and (iii) is sick or infirm. The petitioner is a woman. She is entitled for consideration under Section 437 of the Cr.P.C. Before applying the aforesaid provision to the facts of the case and considering the case of the petitioner for enlargement on bail, it is germane to notice application of the said provision by coordinate Benches of this Court all in the case of offences punishable under Section 302 of the IPC and they being women. A coordinate Bench of this Court in KAVITHA v. STATE OF KARNATAKA – Crl.P.No.2509 of 2019 decided on 05-08-2019 has held as follows:

“2. The complainant by name Smt. Indirani lodged a complaint stating that, she had two sisters by name Parvathamma and Baby and three brothers by name Vijay Kumar, Subramani and Manjunath. The said Subramani was residing along with his brother Vijaya Kumar and his wife Smt. Kavitha along with another sister i.e., Baby and her two sons. The other brother Manjunath was residing along with his wife and children separately. In this background, it is alleged that, on 2-01-2019 at 2.00 p.m. the husband of the petitioner/accused by name Vijayakumar telephone to the husband of the complainant stating that the deceased Subramani is dead. Thereafter, all these persons came to the house of Vijayakumar and saw the dead body of the deceased Subramani and suspected his death. Hence, after the post-mortem examination they came to know that Subramani died due to asphyxia as a result of strangulation. On the basis of such information, the complainant lodged a complaint against the petitioner, which initially came to be registered in UDR No.2/2019 and thereafter in Crime No.5/2019 for the offences punishable under Section 302 of IPC and the police after thorough investigation, laid charge sheet against the petitioner/accused.

3. Learned counsel for the petitioner submitted that, there are many people residing in the said house. The entire case revolves around the voluntary statement of the petitioner/accused – Kavitha that, she informed her husband and others that she actually tried to wake him up but, he did not wake up and she noticed that he was dead. Therefore, the prosecution has to prove beyond reasonable doubt that, actually the petitioner/accused has committed the murder of the deceased by strangulation. It is also not available in the charge sheet that actually what transpired on the particular date of incident and how many persons were present in the house. All those things to be thrashed out during the course of full dressed trial.

4. In the above facts and circumstances of the case, proviso to Section 432 Cr.P.C. would come to the help of the petitioner herein. Even at this stage, if the court comes to the conclusion that, a strong prima facie case is made out against a woman, still the court can exercise its discretion and it may enlarge a lady on bail with conditions. Though the petition is filed under Section 439 of Cr.P.C., the proviso to Section 437 can be equally made use of. The said proviso says that, even if there appears reasonable grounds for believing that the accused is guilty of the offences punishable with death or imprisonment for life, provided the Court may direct that the person referred to in Clause (i) or Clause (ii), be released on bail, if such person is under the age of sixteen years or is a woman or is sick or infirm. Therefore, in the above circumstances, in my opinion, as the petitioner/accused has been in jail since 5-01-2019 and the charge sheet has already been filed, she is entitled to be enlarged on bail during the trial, with certain condition………” (Emphasis supplied).

Long before the said judgment, the very learned Judge in RATNAWWA AND ANOTHER v. STATE OF KARNATAKA – Crl.P.No.100503 of 2014 decided on 13-03-2014, has held as follows:

“2.The petitioners, who are arrayed as accused Nos. 2 and 3 in Crime No.117 of 2013 of Kundgol Police have approached the Sessions Court, Hubli, for grant of bail, after filing of the charge sheet, which came to be rejected. Hence, petitioners are before this Court for grant of bail.

3. The brief factual aspects that emanate from records are that, a person by name Parameshappa Basappa Naikar has lodged a complaint stating that, on 6.10.2013 at about 5.30 p.m. he has received a telephonic message from his son-in-law by name Manjappa Ningappa Balanaikar of Betadur Village that the accused persons – petitioners and one Dyamanna have assaulted the deceased Basappa Shivappa Balanaikar with a spade. Immediately complainant went to the spot and saw the dead body and from one Ningappa Shivappa Balanaikar he came to know that Dyamanna has assaulted on the head of deceased with a spade. It is alleged that petitioners Ratnawwa and Neelawwa have instigated said Dyamanna to assault the deceased, who has succumbed to injuries on the spot. The Police have investigated the matter and even during the course of investigation the eye-witnesses have reiterated same set of facts. CW-8 Ningappa Shivappa Balanaikar, an eye-witness to the incident has stated that the petitioners were present at the time of incident and they have instigated or abetted Dyamanna to commit suit an offence. Looking to the above factual aspects, no overt act has been alleged against these petitioners. The learned Sessions Judge after considering the materials has observed that the petitioners are root cause for the incident and rejected the bail petition filed by petitioners. Police have filed charge sheet against the petitioners. Petitioners were arrested on 7-10-2013 and since then they are in judicial custody.

4. The proviso in Section 437 of Code of Criminal Procedure, 1973 (hereinafter referred to as ‘Cr.P.C.’ for brevity) empowers the Court that even if the offences which are punishable with death or imprisonment for life or imprisonment for seven years or more, the Court may direct that such a person referred to in clause – (i) or (ii) of Section 437 of Cr.P.C. be released on bail, if it is satisfied that if such person is under the age of 16 years or is a woman or is sick or infirm. Therefore, it is a special proviso appended to Section 437 of Cr.P.C. particularly, considering the woman folk, sick and infirm persons and the persons, who are less than 16 years. When specific over acts are not there, the abetment has to be proved before the Court beyond all reasonable doubt and further that only on the basis of such abetment the other accused has committed such a ghastly incident. Hence, it is not necessary to keep the petitioners in jail. …..” (Emphasis supplied).

In a later judgment, another coordinate Bench of this Court in THIPPAMMA @ THIPPAKKA v. STATE OF KARNATAKA – Crl.P.No.8575 of 2017 decided on 01-03-2018, has held has follows:

“2. Respondent-Police has registered a complaint against the petitioner and another accused for the offences under Section 302 and 201 r/w 34 of IPC in Crime No.225 of 2016. The complaint was made by the son of the deceased. It appears that there was illicit relationship between accused Nos. 1 and 2 and the deceased came to know of this. It is alleged that in the background of illicit relationship, on 10-11-2016 in between 11.00 p.m. and 1.30 p.m. accused Nos. 1 and 2 caused death of Thippeswamy.

3. The learned counsel for the petitioner argues that there are no eye-witnesses to the incident. The prosecution has to prove the circumstances. Investigation has been completed and charge sheet is filed and other accused is released on bail. This petitioner is a woman and therefore, requires to be released on bail.

4. The HCGP opposes the grant of bail stating that there are prima facie materials although the entire case rests on circumstantial evidence.

5. Having perused the complaint and other materials, it can be said that since other accused has been released on bail, this petitioner being woman can also be released on bail. That apart, this case rests on circumstantial evidence. Burden is on the prosecution to prove every link in the chain of circumstances. Since charge sheet has been filed and that the petitioner has been in custody for quite a long time, she can be admitted to bail…….” (Emphasis supplied).

All the afore-quoted judgments rendered by the coordinate Benches of this Court, were considering the purport of Section 437 of the Cr.P.C. and were cases where accused No.1 therein were women and all of them alleged of offence punishable under Section 302 of the IPC for commission of murder. It is also a matter of record that the alleged accomplice in the act of murder one Vijay Kumar is granted bail on 13-04-2022 by the learned Sessions Judge. For the aforesaid facts, the statute i.e., Section 437 of the Cr.P.C. and its application in the judgments of three coordinate Benches all would enure to the benefit of the petitioner to be enlarged on bail notwithstanding the fact that the offence alleged is under Section 302 of the IPC. It is not the law that bail should always be denied in a case where the offence punishable is of death or life imprisonment. In exceptional cases, if the statute permits and the facts not being so gory and grave criminal antecedents shrouding the culprit, the consideration in such cases would be different.”

Finally and far most significantly, the Bench then holds in para 9 that, “In my considered view, the facts in the case at hand are not those that would not entitle consideration of the case under Section 437 of the Cr.P.C. particularly, looking at the conduct of the petitioner for having surrendered before the Police on commission of the alleged murder. The petitioner has no criminal antecedents except the present sword hanging on the head, and on release would not be a threat to society, coupled with the fact that the police have completed the investigation and have filed the charge sheet at the case on hand. Wherefore, the following:

ORDER

The criminal petition is allowed. The petitioner/accused No.1 Nethra shall be released on bail in connection with Crime No.530 of 2021 of Madanayakanahalli Police Station and pending before the Additional Civil Judge (Junior Division) and JMFC Court, Nelamangala, Bangalore Rural District subject to the following conditions:

(i) The petitioner shall execute a personal bond for a sum of Rs.2,00,000/- (Rupees two lakhs only) with one surety for the like sum to the satisfaction of the jurisdictional Court.”

(ii) The petitioner shall not indulge in tampering the prosecution witnesses.

(iii) The petitioner shall appear before the jurisdictional Court on all future hearing dates unless exempted by the Court for any genuine cause.

(iv) The petitioner shall not leave the jurisdiction of the trial Court without prior permission of the Court till the case registered against her is disposed of.

The observations made above are only for the purpose of consideration of the application for bail and the same shall not in any manner influence the trial. The trial Court shall consider the case on its merits and without being influenced by this order.”

In sum, it must be underscored that Justice M Nagaprasanna of Karnataka High Court has in this learned, laudable and landmark judgment made it crystal clear that women can definitely be granted bail even in non-bailable offences and even if it is punishable with life sentence/death. But the Court has simultaneously also made it indubitably clear that before granting bail, the Court must definitely take into account the conduct of the petitioner, her past track record, whether she poses a real threat to society if released on bail and all other necessary factors as stated herein aforesaid! It definitely merits no reiteration that all the Courts in similar such cases must always unfailingly and unflinchingly abide by what the Karnataka High Court has laid down so very commendably in this leading case!

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Policy&Politics

Govt extends date for submission of R&D proposals

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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.

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Policy&Politics

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

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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.

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Policy&Politics

India to spend USD 3.7 billion to fence Myanmar border

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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.

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Policy&Politics

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

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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.

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Policy&Politics

FM defends Atal Pension Scheme, highlights guaranteed returns

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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.

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Economic

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

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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.

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