India, Shardul Amarchand Mangaldas & Co updates

Banking

Contributed by Shardul Amarchand Mangaldas & Co
Changes to merchant discount rate framework: impact on stakeholders
  • India
  • March 02 2018

The Reserve Bank of India and the Ministry of Electronics and Information Technology recently established a new regulatory framework for setting limits on and payments of merchant discount rates and encouraging digital payments. Rates will now be determined based not only on the basis of transaction value, but also on turnover. However, in its effort to curb transaction costs for merchants, the government risks imposing significant charges on other system participants.

Licences for pre-paid payment instruments temporarily suspended
  • India
  • December 23 2016

The Reserve Bank of India (RBI) recently issued a press release stating that given the rapid changes to the payments solutions space, it was in the process of reviewing the regulatory framework governing pre-paid payment instruments. The RBI also stated that it will grant no new licences for the issue of pre-paid payment instruments until the end of February 2017. This temporary suspension will not apply to applications made by new small finance banks and payment banks.

Supreme Court rules on post-dated cheque given as security for repayment of loan instalment
  • India
  • December 23 2016

The Supreme Court recently held that a dishonoured post-dated cheque for repayment of a loan instalment that was described as 'security' in the loan agreement was covered by the criminal liability set out in Section 138 of the Negotiable Instruments Act. While deciding whether dishonoured cheques issued to discharge existing liability fall under Section 138, the court explained that the question of whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction.

RBI guidelines for at-will licensing of private banks – key features
  • India
  • September 30 2016

The Reserve Bank of India recently issued guidelines for the at-will licensing of universal banks in the private sector which, for the first time, will allow applicants to apply for a banking licence at will. The at-will regime will lead to increased transparency, better innovation and more realistic valuations, and is a significant step towards a healthier licensing regime for new private banks.

Bank employees as public servants: analysis of Ramesh Geli
  • India
  • April 22 2016

The Supreme Court recently clarified that all bank employees (including those employed by private sector banks) will be treated as public servants for the purposes of anti-corruption law. This ruling has significant implications, as all employees, officers and key managerial personnel of banking companies (ie, private and public sector banks and branches of foreign banks) will now come under the purview of the Prevention of Corruption Act.


Employment & Benefits

Contributed by Shardul Amarchand Mangaldas & Co
Code on Wages soon to be introduced
  • India
  • March 28 2018

The new Code on Wages 2017 was recently introduced in Lok Sabha and is currently pending approval. The code seeks to integrate, amend and simplify the four central labour laws in order to reduce the multiplicity of definitions given under various labour legislation and foster a conducive labour environment by facilitating ease of compliance, thereby promoting the establishment of more organisations and creating more employment opportunities.

Increase in gratuity limit
  • India
  • November 15 2017

The Payment of Gratuity Act 1972 is a form of social security legislation which prescribes a scheme for the payment of gratuity. For the private sector, gratuity is capped at Rs1 million, whereas central government employees can receive gratuity of up to Rs2 million. There is a proposal to increase the cap for the private sector in order to align it with the central government. Although this is a step forward in ensuring better benefits to eligible employees, it will increase employers' financial burden.

Disabilities Act and role of private employers
  • India
  • October 04 2017

The federal government recently enacted a new act in order to empower disabled individuals and ensure their inclusion in the education and employment spheres. Although the government is primarily responsible for ensuring that disabled individuals receive equal treatment under the act, private organisations have also been made accountable for various obligations.

Social security obligation for outbound employees
  • India
  • June 28 2017

With the growing landscape of global businesses, there is a constant need to deploy employees for international assignments not only for skill development, but also for the business needs of the organisation. In order to abate similar obligations in a host country, India has entered into social security agreements (SSAs) with many countries. SSAs offer various benefits, such as the totalisation of benefits and exemption from dual contributions of social security.

Right foot forward: 2016 amendments to maternity benefits
  • India
  • March 15 2017

The Maternity Benefit (Amendment) Bill 2016 was recently passed by the upper house of Parliament. Key changes include enhanced maternity leave, the introduction of maternity leave for adopting and commissioning mothers and new remote working provisions. The amendments are undoubtedly a positive step towards promoting diversity and the increased participation of women in the workforce in the manufacturing and service industries.


Litigation

Contributed by Shardul Amarchand Mangaldas & Co
Supreme Court issues two important consumer law judgments
  • India
  • March 13 2018

The Supreme Court recently issued two judgments regarding consumer law. In the first, the Supreme Court held that the courts should take a pragmatic view of consumers' rights considering their relative disadvantage with regard to suppliers of goods or services. In the second, the court held that, in the context of a vehicle insurance policy, the mere failure of the vehicle owner to intimate the insurer immediately after the theft of the vehicle should not bar settlement of genuine claims.

Contract law: three most important Supreme Court judgments
  • India
  • March 06 2018

In an important recent case regarding contract law, the Supreme Court held that the commercial courts should not seek to interpret the implied terms of a contract. In a second notable case, the court examined whether an increase in coal prices (due to a change in Indonesian law) could be cited as a force majeure event by certain power-generating companies that were sourcing coal from Indonesia. Finally, the court also recently issued an important decision in a suit for damages and wrongful termination.

Criminal law: most important Supreme Court judgments in 2017
  • India
  • February 27 2018

The most important criminal law Supreme Court judgments in 2017 included a case which held that Section 45 of the Prevention of Money Laundering Act 2002, on the grant of bail, violates the right to equality and right to life. Elsewhere, the court clarified the criteria for quashing criminal proceedings and issued certain guidelines in order to prevent the misuse of Section 498A of the Penal Code.

Supreme Court rules on consumer rights and arbitration agreements
  • India
  • February 13 2018

A division bench of the Supreme Court recently decided to examine the correctness of a judgment by the National Consumer Disputes Redressal Commission (NCDRC), New Delhi. The NCDRC had held that, among other things, consumer disputes cannot be settled by arbitration. This decision begs the question whether the line of reasoning preferred by the NCDRC is likely to invite more critical scrutiny by the Supreme Court.

Public interest litigation: Supreme Court issues landmark judgments
  • India
  • February 06 2018

Throughout 2017, the Supreme Court issued judgments on public interest litigation cases. These include reviewing the way in which senior advocates are designated, determining whether to constitute a special investigation team and establishing fast-track courts for criminal cases.


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