After the Union Cabinet under Prime Minister Narendra Modi empowered the Reserve Bank of India (RBI) to deal with the problem of bad loans and Non-performing Assets (NPA), the Enforcement Directorate (ED) and Income Tax department are all set to get new teeth to deal with defaulters and money launderers. The two agencies are set to be awarded new powers to auction assets of people involved in defaulting and laundering of money, a report in Business Standard said.
The move is expected help investors who have lost of thousands of crores of rupees, to expedite the process of recovering their money. According to the Business Standard report, the Modi government will introduce provisions in the Prevention of Money Laundering Act (PMLA), to allow ED and I-T department to auction the attached assets right after a chargesheet is filed or right before the trial begins in court. The Business Standard report quoted an ED official as saying, “The ministry concerned has deliberated the issue with senior officials of enforcement agencies and tax authorities.”
The move is expected to fasten the process of bringing to books the people at fault, especially in cases where the assets have been converted to immovable property, and also where investors are awaiting a court verdict. Under the current setup, the matter can be dragged on for a long time because of the appeals and adjudication proceedings. This means that it takes a lot of time for the case to reach the stage of liquidation process, which can only begin after the court has reached its verdict.
Meanwhile, the accused will be deprived of reaping the benefits of the wealth they have accumulated by crooked means, but can appeal against the order before the adjudicating authority within 180 days, said the report. ED lawyer Hiten Venegaonkar told Business Standard, “These changes will aid in the recovery of proceeds of crime that have been converted into immovable property and also in cases where investors are awaiting a court verdict.”
Earlier, the Special Investigation Team on black money had suggested to the government to put in place a statutory mechanism to empower the ED to initiate proceedings even before a case is registered by the police or Central Bureau of Investigation (CBI). This particular move comes close on the heels on the ordinance passed by the Modi government to make certain amendments to the Banking Regulation Act, giving more power to the RBI to instruct banks to resolve stressed assets and initiate proceedings against their biggest defaulters.