The Union government has initiated the process for decriminalising economic offences that are currently punishable with a jail term, fine or both. The government has sought opinions from stakeholders like state governments and the public on proposals to amend 19 acts that criminalise economic offences like a bounced cheque.
As per the Centre, the move is aimed at speeding up the economic revival process and encourage businesses.
There is a growing concern in the government that due to the Covid-19 pandemic and economic distress there might be a surge in financial failures, which under current rules can get treated as frauds.
These proposals include amending the Negotiable Instrument Act which covers the dishonouring of a cheque or in simple terms cheque bouncing. Apart from that, the state of reason released the Finance Ministry on Monday also discusses required changes in various sections of Banning of Unregulated Deposit Schemes Act, RBI Act, NABARD Act, SARFAESI Act, Insurance Act, PFRDA Act and Payments and Settlements Systems Act.
To get the opinion of all stakeholders, the Finance Ministry’s department of financial services has asked the state governments and UT administrations, civil society/non-government organisations, academicians, public and private sector organisations, multilateral institutions and members of the public to send their views and comments latest by June 23. The central government will study the opinions and finalise the rules.
As per the current law, anyone accused of issuing a cheque that’s dishonoured or runs an unregulated deposit scheme that goes insolvent has to face imprisonment or fine or both. The government proposes to decriminalise such offences.
Instead, the government proposes to bring in a method of compounding in which an accused person would have to pay a penalty and matter will end there. The suggestion is that the element of criminality needs to be decided by a court while a compounding penalty can be determined by an adjudicating office with quasi-judicial powers.
A senior finance ministry official speaking to India today said, “Criminal penalties, including imprisonment for minor offences act as a deterrent. This is perceived as one of the major reasons impacting business sentiment and hindering investments both from domestic and foreign investors. This becomes even more pertinent in the post-Covid-19 response strategy to help revive the economic growth and improve the justice system.”
