Welcome to our Regulations category, a comprehensive resource meticulously designed to assist you in navigating the intricately woven tapestry of regulatory norms governing the fintech industry. With regulatory frameworks being in a state of constant evolution, staying abreast of the latest changes is crucial for businesses and professionals operating within the financial sector.
The articles housed within this category delve deeply into an expansive range of regulatory topics. We explore everything from the shifts in KYC/AML guidelines to the influence of data privacy legislations on financial institutions. Our aim is to provide a multi-faceted understanding of these regulatory transitions and the implications they carry for businesses.
At Signzy, we recognize the significant role regulatory compliance plays in the financial industry. Our innovative solutions are crafted with a keen eye on the most recent regulatory requisites. Our aim is to help businesses remain compliant without having to sacrifice efficiency or compromise on delivering exceptional customer experiences.
Whether you’re a compliance officer diligently ensuring that operations align with regulations, a fintech entrepreneur navigating the challenging waters of the industry, or a professional immersed in the financial sector, our Regulations category offers invaluable insights into the ever-changing regulatory landscape.
We cordially invite you to join us as we embark on an exploration of the world of fintech regulations. Through our articles, we aim to provoke thought, spark discussion, and provide guidance on how to navigate the complex regulatory environment effectively. Join us on this enlightening journey as we untangle the intricate web of regulatory norms shaping the world of fintech.
Although the cryptocurrency market is largely unregulated in India, cryptocurrency remains an investment option of interest for young Indians. Just recently, the Indian Income Tax Department issued tax notices to thousands of cryptocurrency investors. BR Balakrishnan, Director General of Investigation (Karnataka and Goa), Income Tax Department, said that they couldn’t turn a blind eye to the whole cryptocurrency investment space and that “It would have been disastrous to wait until the final verdict was out on its legality.”
So legal or regulated or not, cryptocurrencies are selling in India.
But the lack of government regulations on cryptocurrencies like bitcoins makes them prone to frauds. Recently, India has witnessed several cases of cryptocurrency frauds right from the 84-crore Goregaon cryptocurrency investment scam to the 2,200-crore Mumbai fraud incident.
Although RBI has never supported the usage or trading of cryptocurrencies in India, it hasn’t imposed any bans either. But the rising fraud instances show that there’s an urgent need to regulate the market.
Recently while presenting the Union Budget 2018, finance minister Arun Jaitley said “The government does not consider cryptocurrencies as legal tender or coin and will take all measures to eliminate use of these cryptoassets in financing illegitimate activities, or as part of the payment system.” The Finance Minister’s speech has triggered lots of responses from the Indian Cryptocurrency exchanges.
Shivam Thakral, co-founder and CEO Delhi-based BuyUcoin, said “Nothing new was quoted by our Finance Minister in the budget announcement today. It was a repetition of the same old cohort whilst the industry was expecting clarity over taxation and it’s regulation from the Government.”
Another bitcoin exchange Unocoin also maintains that no new Legislature has been introduced and the legal status of Cryptocurrency remains unchanged. That it’s the same unregulated virtual currency now as it was earlier. The Chief executive and co-founder of Unocoin Sathvik Vishwanath said “There is no change in the government stance with respect to trading cryptocurrencies. Cryptocurrency holders need not panic and the business is as usual.”
But even with the ‘impending’ official regulations, cryptocurrency companies can (and some are) proactively following norms such as KYC and AML, which they could certainly be subject to if the regulation happens. These measures will also address the key concerns the Finance Ministry has with cryptocurrencies.
Regulatory processes some Indian Cryptocurrency Companies are already implementing
While Indian cryptocurrency companies wait for the official regulation to happen, some of them are going ahead and borrowing the guidelines that apply to other financial institutions. This is the way to go as the international law firm, Norton Rose Fulbright, notes: “As a general rule, where no specific steps have been taken to regulate cryptocurrencies in the relevant jurisdiction, it would be necessary to refer to the existing legal and regulatory frameworks to understand how they might apply to the new circumstances that the technology enables.”
Which brings us to norms such as KYC, AML, and Data Privacy among others.
Atulya Bhatt, Founder of India’s leading cryptocurrency marketplace, BuyUcoin, stresses on how with self-regulation cryptocurrency companies can counter the anonymity of transactions and tackle money laundering in cryptocurrency trade. He says:
“Indian exchanges counter the anonymity of transactions and money laundering issues via self-regulation.”
Bhatt also recommends using advanced technological solutions for digital identity verification processes.
Hemanth Kumar, CIO at Unocoin (India’s most popular bitcoin wallet company), also underlines the importance of following KYC and AML provisions for cryptocurrency companies to remain accountable. He says:
“Regulation of entry points through strict KYC norms and deploying AML policies for monitoring the flow of the funds is key for any crypto exchange to bring in accountability of its customers.”
As you can see, KYC and AML are recurring themes even as cryptocurrency companies are practicing proactive self-regulations.
South Korea, which has just recently legalised cryptocurrencies, has already released a regulatory framework focusing on AML measures and KYC. The official document states that these measure will “reduce room for cryptocurrency transactions to be exploited for illegal activities, such as crimes, money laundering, and tax evasion.”
Key points from South Korea’s KYC and AML measures in its cryptocurrency regulation policies:
Cryptocurrency companies need to share (with the banks) information about the purpose of the transactions, the sources of funds, details about services the exchanges provide, and whether the exchanges are using verified real-name accounts
Cryptocurrency companies need to monitor (and report any) suspicious transactions
Cryptocurrency companies can only get bank accounts for functioning IF the exchanges provide their users’ ID information
If India, too, issues a similar framework, AML measures and KYC will clearly be the central themes.
In addition to these, cryptocurrency companies will also have to look into user data protection. Because cryptocurrencies use blockchains, and because blockchains are decentralized, distributed, and public, protecting the information on a blockchain can be challenging.
Wrapping it up…
Given the current state of regulation on cryptocurrency trading in India, cryptocurrency companies already have a lot at stake. But if India does end up following the likes of Japan, US, and South Korea and make virtual currencies legal, then all these companies will be expected to face regulations similar to most financial institutions.
Starting to work on deploying stronger KYC, user data privacy, and AML policies look like a great way to prepare for a time for when the regulation does happen. These measures also reinforce the government’s key concerns such as financing illegitimate activities, money laundering, and terrorist financing.
Signzy disclosure:The above content is an opinion and is for informational purposes only. Please don’t consider this as legal advice. It’s best to seek a legal consultant’s opinion before framing your policies.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
In a recent judgement, a nine-judge Supreme Court Bench unanimously ruled that individual privacy is a fundamental right. The court noted that the “Right to Privacy is an integral part of Right to Life and Personal Liberty guaranteed in Article 21 of the Constitution.” The right to privacy verdict, although primarily passed on a petition filed about the Aadhar Card scheme, will impact every company that collects and handles user data.
In its 547-page judgment, the Supreme Court touched upon the different aspects of informational privacy — and explained how collecting data could threaten an individual’s privacy.
This Supreme Court ruling is a check: For both the government (against which the case was mainly fought) as well as the non-state actors or private companies because it doesn’t just oppose any privacy invasive practices employed by the government but also applies to private companies that collect user data.
In this article we will give a short description of court’s view on what is private and their concerns in a digital world. Then we will look at the new rulings impact on the financial sector with a 7-point framework. We will be looking at areas like cross-selling, credit history, SMS scraping, Aadhar KYC, Payments, Banking Agents, Social behavioral data among others. Now lets start with the basics.
Defining what is “personal and confidential”
The information must be “personal and confidential” to be protected by right to privacy. One of the points raised by the opposing counsel during the trial was that privacy was vague and ill-defined. The judges patiently tried defining what is “private” data, to carve out the scope of law.
For example, the Court pointed out that data about electricity consumption pattern of a person is NOT personal or confidential, and couldn’t be protected as “private information”. That said, the Court also cited a UK judgement that stated the storing of the biometric data indefinitely of individuals no longer suspect of criminal activities would be an invasion of privacy. Clearly, a person’s biometric data is both “personal and confidential”.
The Supreme Court used an infographic (from Bert-Jaap Koops et al., “A Typology of Privacy”) in its judgement to depict the nature of data and its classification. This is extremely rare and hence also shows how judges understood the importance of the judgement and that it would be read by people who might need simpler language and symbols to understand the implications:
Privacy in the Digital World
While the court had a broader mandate and covered privacy from all aspects,they did cover digital privacy in detail. At some level they felt the real challenge to privacy is coming from this rapid transformation of processes from offline to digital. They also gave an intriguing example of a travel agent, which illustrates this point well:
“The old-fashioned travel agent has been rendered redundant by web portals which provide everything from restaurants to rest houses, airline tickets to art galleries, museum tickets to music shows. These are but a few of the reasons people access the internet each day of their lives. Yet every transaction of an individual user and every site that she visits, leaves electronic tracks generally without her knowledge. These electronic tracks contain powerful means of information which provide knowledge of the sort of person that the user is and her interests. Individually, these information silos may seem inconsequential. In aggregation, they disclose the nature of the personality: food habits, language, health, hobbies, sexual preferences, friendships, ways of dress and political affiliation. In aggregation, information provides a picture of the being: of things which matter and those that don’t, of things to be disclosed and those best hidden.”
Expressing privacy concerns about how tracking happens in the digital world, the Court hinted at the possibility of scrutinizing activities carried on by companies like reading/analyzing/tracking emails, messages, other social behaviour.
Further the court stressed upon properties of the digital world that make it difficult to detect privacy invasion and hence heighten privacy concerns:
Non-rivalrous — simultaneous use by multiple users
Invisible — invasions of data privacy are difficult to detect — and it travels at speed of light making it further difficult to trace any breach of privacy. Data can be accessed, stored and transmitted without notice
Recombinant — data collected can be used, analysed and combined to create more data output which is unseen earlier
Expanding on these principles the order stated that owing to the nature of digital data, it becomes possible to combine data from social profiles and IoT devices to create information about the individual which did not exist. Secondly, while collecting the behaviour of one person it could also be possible to gather information about other individuals around him. The Court noted that these concerns are from both State and Private entities as both use Big Data to analyse data about individuals which is a concern to privacy.
Easily one of the most tech-savvy orders ever, this Supreme Court judgement took into account various technical intricacies of the digital world and cited specific instances:
Cookies used for tagging IP
Browsing information to create profiles using algorithms
Automated content analysis of emails for targeted marketing
Online purchases like books, airlines, book taxi etc. and their history for user behaviour and doing income analysis
Metadata and IoT — used to collect information about a person’s behaviour
It is refreshing to see such technical detail quoted in the judgement.
The court also gave details on what can be the future of digital privacy and principles of the new law. We have tried to summarize it below in a simple framework. But for any legal geeks out there we have also created another article which details out laws examined by the court and their approach in reaching to this conclusion.
A 7-point framework to guide companies’ data policies (based on the privacy case judgement)
We’ve analyzed the judgement in extensive detail and have come up with a simple 7-point framework that shows the key points that organizations need to think about when framing their data policies :
Personal vs Private: Every data that is personal is not necessarily private. A user’s name, for example. Because a person’s name is used in public communication, name can be considered to be non-private personal information. Also any information that is anonymized is neither personal or private and exempt from purview of the law.
Explicit Consent in plain words: User’s consent has to be taken explicitly and cannot be hidden inside lengthy terms of service or agreements.
Consent alone is insufficient: Court has also opined that in certain situations, even a consent based mechanism may not be able to protect the customer and hence encroachment of privacy shouldn’t be a preferred option.
Necessity: This is a simple principle which asks the question if collecting it is really necessary to invade privacy to achieve the outcome.
Proportionate benefit or risk: Whenever it is necessary it should be weighed against proportionate benefits and risks. Privacy should not be encroached unless there is some proportionate good possible or some bad that is preventable.
Right to Forget: Eventually the user should have the right to revoke access to his/her data
Access and Correction: The ownership of data is with the individual whose private data is collected. Therefore he has a right to access and correct the data or delete as given above.
Note: We hope this will help businesses make sound and compliant judgement around their data, but do take professional help to make sure you are fully compliant.
Few instances of impact in the financial world
The right to privacy might initiate changes in current processes and hence some of the current and emerging areas may need a relook:
Credit History under Credit Information Act
Collection of credit data: Collection of credit data by the creditor is completely ok as it is consent-driven private data between the two parties.
Exchange of credit data: Banks report credit data to licensed agencies. These agencies then exchange this data with other banks as requested by the bank. This might require clear exceptions made in the privacy act or a re-look into how credit reports are requested, what kind of information can be shared and what is to be hidden.
Access and control over credit history: Currently consumers cannot easily request credit history to be forgotten or edited. Going further there would need to be an option to have greater control and access of one’s own credit history.
Pulling data of a customer from KRA by Mutual Fund and AMCs
Collection of data: Currently the agency that collects the data and the one that stores the data are different. Clear consent and declarations hence maybe needed.
Current practice of data pull from PAN, without an appropriate consent layer may also need a relook.
Account Details
Login based scraping: Account username and password definitely fall into the domain of private data. And the reason in many cases is convenience, as it might be more difficult for the user to submit a copy of bank statement himself. Thus this encroachment may not meet the principle of necessity or proportionate benefit.
Account Aggregator: The new RBI guidelines provide for a consent layer and a lot of regulation around security of such data. The data does not remain with the aggregator post-completion of the purpose and therefore the guidelines seemed to have given protection to privacy and may not be greatly affected by the judgment.
Mobile data collection during application download
Following are few of affected the categories and let’s go through them one by one:
Malware or Security risk: The data collected to assess malware risk may not fall within privacy parameter. Specially if it can be anonymized enough to be unlinked to the individual himself. But current assessment tools and processes might need to ensure they follow this principle.
SMS reading: This is being seen as a new innovative way to provide credit assessment. But within the new privacy regime, this maybe really tricky. Let us explain: SMS reading is a clear invasion into privacy and hence would require explicit consent. But where it gets really tricky is that SMS is usually a private conversation between two parties and hence you would need consent of both the parties to read SMS. It will be interesting to see how the innovation can be enabled without being unlawful.
Reading personal contacts to use later for collection: Like SMS reading this may also need consent of two parties and hence should be seen in the same light. (Signzy would be coming up with another article on multi-party conversations including email, sms, call etc. We will examine in detail the implications under a privacy law.)
Aadhar based KYC regime
There are two KYC possibilities in Aadhar A) Demo Auth B) eKYC — biometric or OTP. As the Aadhar regime has a robust consent architecture in place it should hold good even in the present regime. The only concern raised by the court was on biometrics being private. Hence the nature of benefit should be proportionate as consent alone, as noted by the court may not be enough protection. Hence biometric based KYC for account opening, new SIM or other risky scenario might be acceptable. Biometric based KYC for non-risky scenarios such as event registration might need a relook.
The other more grave change maybe the need for an alternate option. While the financial regulators in line with government view had been pushing a biometric KYC, the current law would require the financial system to provide alternatives. This is especially true for cases where there maybe no real risk or proportionate benefit of forcing biometric KYC.
Users financial transaction history
Cross-sell: Financial data mining for targeting for another product might definitely fall under invasion of privacy. The judges have clearly defined “financial information” as private. And such targeting in no ways provides “proportionate” benefit. Hence banks will need to take explicit consent in the original account opening form, even then it’s best that such analysis and targeting is totally automated. Closer on the lines of Google’s approach where a Google employee at no point has access to your records even though you are targeted based on your personal data. This will make sure that there is no leakage or profiling and hence the principles are being adhered to. But there would need to be clear regulation to define such actions by the bank.
AML/CFT risk assessment: This is one use case where the risk may justify privacy invasion. But we need to weigh it against the principle of necessity. Again as it stands out it might not be necessary to invade privacy. The court has enunciated how “anonymity” does provide privacy, and hence analysis of data that has been “anonymized” will not be a breach of privacy. Only when suspect transactions are found, should the bank de-anonymize the data an identify the actual account holder. (We understand this might need much more detailed explanation, rest assured we will be writing a longer post on the impact on AML/CFT processes)
Credit Risk monitoring: Unless the risk is large it might be very difficult to justify reading of transactions. The Financial Institution will have to provide the borrower a mechanism to provide consent each time such an assessment is made. This might defeat the whole purpose as someone with a risk may actually deny consent every-time. Thus it would be interesting to see how this part of the system pans out and what regulations are framed to balance risk and privacy concerns.
Banking Agents
Collection of data: Even current regulations require Banks to ensure that agents are registered and a clear trail can be established which ensure zero data leakage. This might now fall under a clear law or regulation, further not only Banks but all financial institutions (FIs) might need to have stricter regulations for agent models.
Storage of data: The storage of data will strictly require physical or digital records to be destroyed by the agents post transaction. Unless there is explicit consent by the consumer for such storage.
Sharing of data with other parties: Many a times agents do end up sharing data with parties who at the time of consent were not in the picture. As an example if the intended Bank doesn’t give a loan, data might be shared with other parties as well. Now one will need to take clear consent to ensure that this sharing is agreed by the user.
Payments
Aadhar Pay: Biometric has been considered by the court as a core private space. And it has also opined that at times consent may not be enough as the users may not understand the risks. In this light, Aadhar Pay might not have “proportionate” good. As while KYC carries risk to financial system and hence proportionate good, mere payments might not be an ideal scenario to invade individual privacy.
Cards based payments: Current cards eco-system relies on a “card” and PIN and no specific private data, at least from our point of view it doesn’t encroach privacy during payments. Fraud rules are also generally based on aggregated behavior and hence might also not carry any risk of privacy encroachment.
Mobile wallets: Since it is based on a standalone wallet that I recharge it has no personal data about me other than my basic KYC, phone number, email and my transaction details. Therefore no private information is shared with wallets. But wallets would not be able to leverage on my digital footprint for credit assessment without clear consent.
Social behavioral data
Social media: Google and Facebook have recently shown interest in using customer data gathered over a period of time as credit decision tools. This data has clearly been stated to be private. Thus this too would fall under the gambit of future regulation
Application’s own data: Even if the data is not coming from a third party but reflects user behavior on the same platform, such as Amazon, Uber etc. It will still be considered within the domain of privacy and needs to be regulated
As social behavior data is rich and possibly being seen as an alternative to many traditional data stores it important to share another case regarding Whatsapp’s decision to share its data with Facebook (its parent company). The matter concerns the privacy of 160 million Indian Whatsapp users. Such data has expressedly been considered to be private — and Judge’s comments left no room for imagining what their views were:
“Recently, it was pointed out that “‘Uber’, the world’s largest taxi company, owns no vehicles. ‘Facebook’, the world’s most popular media owner, creates no content. ‘Alibaba’, the most valuable retailer, has no inventory. And ‘Airbnb’, the world’s largest accommodation provider, owns no real estate. Something interesting is happening. […]
Uber’ knows our whereabouts and the places we frequent. ‘Facebook’ at the least, knows who we are friends with. ‘Alibaba’ knows our shopping habits. ‘Airbnb’ knows where we are travelling to.
Social networks providers, search engines, e-mail service providers, messaging applications are all further examples of non-state actors that have extensive knowledge of our movements, financial transactions, conversations — both personal and professional, health, mental state, interest, travel locations, fares and shopping habits […]
Large number of people would like to keep such search history private, but it rarely remains private, and is collected, sold and analysed for purposes such as targeted advertising[…]
Thus, there is an unprecedented need for regulation regarding the extent to which such information can be stored, processed and used by non-state actors. There is also a need for protection of such information from the State”
These are just some of the instances that maybe impacted by this judgement. We will be happy if you can share any areas we may have missed and we will add them here.
Way Forward
This is certainly a landmark judgement and in some ways can claim to be the re-birth of privacy. In a digital world it was assumed that privacy has been sacrificed at the altar of convenience. But the court has upheld an individual’s right to his privacy providing him means to protect it and hence re-introduced a principle which seemed lost in the digital world. As the next steps, it’s incumbent upon the legislature to create clear law regarding this concern. But it’s safe to assume that usage of such data would be become much more regulated than it is now.
We are hoping that this article would be useful to you and also help you make sound business decisions. We might not have been able to go into depths of few topics which need much more deliberation. Hence we would be coming up with few more articles going in depth into some of these topics. We will be happy to receive feedback and also get to know which areas would you want much more in-depth analysis.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
Certification process, effects due to delays and the scope for legal minimalism in the domain.
Government of India recently announced that they are going to stop physical publishing of the Official Gazette, which is the official press/media of the Government. Any law or rules which are made by the government need to be published in this Gazette for them to become operational. The Government has recently proposed to convert the Gazette into an electronic form. Indian government estimates that this move will save Rs. 40 crores and 90 tonnes of paper annually, thus proving a commendable measure reflecting minimalism by the government of India. This brings us to another aspect of publishing by a government agency- Courts.
Process of Obtaining Certified Copies
Taking out official copies of court orders as per todays procedure is a task in itself. The process is so cumbersome that there are specialized agents in court to just take out certified copies. Several orders are passed during the tenure of a case. The only way to know the order is to either inspect and read it from the court file or apply and get a ‘certified copy’ of the order. Even the parties to a case are not given copies of the court order without applying for a ‘certified copy’.
Typically, the process for a certified copy (“CC”) is as follows –
An order is dictated by the judge to a typist, who types it on a computer (typewriters were used earlier).
The order is then printed through a computer and signed by judge.
The same is then kept in the case file.
Applicant makes an application to Court Registry for CC.
Court Registry takes the application to the Judge.
Judge approves the application for CC.
The application comes back to Registry.
Registry initiates photocopy of the order from the court file.
The copies come back from photocopy section.
The copies are stamped by court seal and signed.
Applicant then needs to follow-up and receives the CC after it is ready.
Usually, it takes around 3–5 days to get this CC. In some courts (because of pendency) it might even take around 30 days to get CC. These orders are nothing but a publication by a government arm, but the process and method adopted takes us back to the 18th century.
Online Judgements as Example
Today all Supreme Court judgments are published online. Some High Courts and Tribunals have also started online publishing. However, these online orders are not given the status of ‘Certified Copy’ and you will still have to follow the 18th century method to get a CC from these courts.
Substantial Injustice due to delay in obtaining CC –
Sometimes, the mechanical procedure of procuring a CC through the lethargic administrative system of the Courts can lead to gross injustice to ordinary citizens.
Illustration: Law provides that in case a person is arrested by the police he can apply to the court for bail (i.e. his release). In case he makes this application in the first court (i.e. Magistrate) and is rejected, he can challenge this order of the Magistrate before a higher court (i.e. Court of Sessions). But to be able to challenge this first order from Magistrate before the higher court, he would need to get a CC. However, because of the overburdened court machinery, he may not get CC the same day and will not be able to approach the higher court immediately. Which means a person would have to spend time in jail only because the CC was not received in time. Thus. as CC is the only authentic proof of an order being passed. Any delay in obtaining it can result in immense hardship for litigants.
Applying Minimalism to this process of court orders
The Judiciary can take a cue from the government of India which has chosen online platform to publish laws. If laws can be published online, then court orders which are based on those laws can also be published online.
Few things that need to be taken care of –
a.Authentication
The court orders today are authentic only when signed by the judge and then stamped with his seal. How do we ensure this for online judgments?
The Ministry of Corporate Affairs can serve as good guidance that respect. It has completely digitised its process of company incorporation sound compliance. A certificate of incorporation (i.e. a government approval to formation of a company) is no longer physical but only digital. It is signed via digital signature of the Registrar of Companies and the original is uploaded on the Ministry website.
In the same way, judges can authenticate their orders by attesting their digital signatures as done by the Registrar of Companies.
a.Fraud and Forgery
Digital media like a ‘pdf’ can be edited and therefore it may be argued that the same cannot be relied upon. The idea in a digital India would be to rely only on a digital copy and hence instead of a paper order what the authorities should insist on is the web link on which the order is uploaded. Any action to be taken by any authority should be only after verification online.
In fact, an online order provides immediate opportunity to verify a court order. There are cases where forged court orders are circulated and have been used. The only way for verification of such orders would be to go and inspect the court file and see if they match. Thus an online order takes care of such cumbersome verification procedure as well.
b.Revenue earned by CC
A nominal fee is charged for issuing CC. The same is done considering the manpower involved for physically photocopying large files and huge number of documents. In case of a digital order such costs will be substantially reduced.
A nominal fee though, may be charged for accessing these orders as are charged by the Ministry of Corporate Affairs in case you want to inspect any company documents.
Implementation:
This does not require any major innovation for courts as today most of the orders are typed on a computer. Case statuses are also regularly updated on the district court website by the court office. Therefore, the court office can at the same time of updating the next date upload the pdf copy of the judgment along with the digital signature of the judge.
The Supreme Court, many High Courts, Tribunals and some of the District Courts are already uploading the orders on their websites daily. All that needs to be done is to give these orders the status of Certified Copies. Other courts can slowly follow suit.
Law Commission Report:
The Law Commission in its 188th Report published way back in 2003 had in fact made this suggestion and observed that once the digital signatures are valid, certified copies can be issued to the litigants on Internet under the court’s Digital Signature Certificates.
But Alas! Even after a period of 12 years from the publishing of the report, the archaic methods of obtaining CC still remains.
Conclusion
Adopting a process of obtaining Certified Copies online would save a huge chunk of time for lawyers, litigants, court clerks and the entire machinery. It will also go a long way in saving paper. Publishing them online is an easy task as most orders are typed and printed from a computer anyway.
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
Malicious Prosecution, while often viewed through a negative lens, offers an unexpected advantage in the realm of judicial efficiency. By identifying and curtailing cases initiated with ill intent or without a solid legal basis, courts can significantly reduce their pendency of cases. This approach not only ensures that genuine litigants receive timely justice but also discourages the misuse of the judicial process for personal vendettas or tactical delays. The growing awareness and consequential action against such practices could pave the way for a more streamlined, effective, and trusted legal system, minimizing case backlogs and promoting the true essence of justice.
In India, when a person is prosecuted by the criminal justice system, all he can do is defend himself. In the event of successfully coming out clean from the due process of law, he is just left with the order of the Court. The mental stress and agony, the loss of reputation, the loss of personal liberty in case of arrest and detention, loss of livelihood and earning, the costs of defending the prosecution, the physical hardships etc are not accounted for. The victim of vexatious or malicious litigation has no legal recourse to protect himself against such abuse of process of law.
Supreme Court Precedent on Reputation and Allied Concepts
The Supreme Court of India has said that Right to Reputation is part and parcel of Right to Life and Personal Liberty guaranteed by the Constitution of India[1]. The same was reiterated by the Hon’ble Supreme Court in 2014 in the case of Umesh Kumar v. State of Andhra Pradesh[2]. Also in January, 2014, the Apex Court while deciding a case observed that instances of police machinery filing false charges is increasing day by day, and such cops should be punished[3].
The Supreme Court reiterated in July, 2014 that there is a rising trend amongst the women to file false cases under Sec. 498A of Indian Penal Code, and that the police should not make automatic arrests in such cases as it permanently scars the reputation of the person.[4] In Subroto Roy Sahara v. Union of India & Ors.[5], the Hon’ble Apex Court made a suggestion to the legislature to formulate mechanism that one who initiates and continues senseless litigation should pay for the same. From this, it is very apparent, that even the judiciary of our country is feeling the need to curb malicious prosecution.
Failure of Criminal Justice System
The basic purpose and the soul of the criminal justice system of our country was to punish the criminals, and create deterrence among them, so as to provide for a law abiding society for the common man. However, over the years, the very soul of this justice system has been lost. It is no longer effective in punishing the culprits. Instead it is increasingly being used to harass the common man.
There are endless citizens in our country who face the judicial system and prosecution for years together, and in the end it turns out that there was no merit in the case. For a matter of fact, as of today, in countless cases recourse is taken to criminal proceedings only as a way of ‘pressure tactic’ or to illicit a ‘compromise’. In the end, the real victim turns out to be the accused, as he has to face the complicated and time consuming justice delivery system of India. Action for malicious prosecution will be the apt tool to fight this menace.
Concept of Malicious Prosecution
The concept of malicious prosecution recognises the individual’s interest in not being subjected to unjustified litigation. Litigation, especially criminal, brings along with it great humiliation, harassment, annoyance, loss of reputation and loss of livelihood amongst other things. In order to curb the unjust litigation, malicious prosecution plays an important role.
One of the earliest cases to be decided on the concept of Malicious Prosecution was Savil v. Roberts [6]. The said case laid down a three-part test for malicious prosecution: damage to the person, damage to the property and damage to the man’s fame. Any litigation which has been intentionally initiated to accomplish either of these three tasks, would be a malicious prosecution. An action, for damages for being subjected to such a litigation, is called an action for malicious prosecution.
What can be Done
It is the need of the hour to address this issue. It is necessary to add legal provisions which act as an effective deterrent for such ‘malicious prosecution’ and compensates the people for their loss of reputation, earnings, livelihood, and the trauma. This could possibly be achieved by adding a chapter dedicated to malicious prosecution by way of amendments to the Code of Criminal Procedure, or promulgating a new legislature on the following lines –
The person initiating malicious prosecution (aggresor) is punished with imprisonment term and/or fine, equivalent to the punishment mentioned for the charges levelled by him in the malicious prosecution.
Loss of reputation and livelihood be compensated by imposing additional fine on the aggresor by computing the amount after taking into consideration the income, qualification and social status of the victim of malicious prosecution. The said amount can be secured by attaching the bank accounts or property of the aggresor, if the payment is not made forthwith.
Immunity should not be given to the prosecuting and investigation agencies who falsely prosecute any person. In a country like ours, where even the highest judicial courts are held accountable for their actions, this is the least we can do.
Malicious Prosecution: A Tool to Achieve Minimalism
Various governments over the years in India have promised to curb the pendency of cases in our courts. However, none have been successful in delivering on this promise. The essential reason for the pendency is the complexity on one hand, and the easy and free initiation of criminal proceedings without any penal or punitive action for false initiation of proceedings on the other hand. Formulation and strict implementation of provisions of Malicious Prosecution would aid in reducing the pendency to a great extent, as people would be very cautious before initiating criminal proceedings. As a result, a great percentage of cases would never be filed thereby reducing the burden of the judiciary. In return, the judiciary can focus all its resources on genuine cases due to which the disposal of the same would be much quicker.
Malicious Prosecution has been largely implemented effectively in countries like Canada and United States of America to curb malicious litigations. Specifically in United States of America, the implementation of the law of Malicious Prosecution is so stringent, that damages amounting to millions of dollars are to be paid if a person initiates a malicious prosecution. As a result, people think twice before initiating any legal proceeding thereby protecting innocent citizens as well as saving the precious time of the judiciary. This ensures that no superfluous and redundant litigations flood the court, thus proving to be truly minimalistic in nature.
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The need for technological developments to be incorporated into the procedure and paperwork of litigation petitions.
Problem in Status Quo: Electronic Petitions
A standard process of litigation is known to be very cumbersome. Everyone has to deal with innumerable visits to court and endless paperwork. The process of litigation is intertwined with inefficient administration in Courts as well. For a simple litigation, all parties involved have to go through countless stacks of paper in the form or orders, plaints, written statements etc. A single case has various stages to it and each stage leads to a multiplicity of paper and excessive documentation. A paperless system of filing of petitions would ensure an environmental friendly judiciary and a substantial amount of time saved, not to mention bringing additional transparency and efficiency.
Applying Minimalism to the Process of E-Filing
The judiciary has already shown that it is willing to embrace minimalism and move towards a digitised system. Instances like electronic recording of witness statements, a digital FIR process being envisioned; are indicators of change. Thus, it is obvious to see that the Government is already taking steps towards a minimalist approach and is keen on digitisation. Hopefully this will make the potential change quicker.
Implementation
a.Technology
Implementation of a process where petitions can be filed is not as hard as it sounds. Various tech companies across the world have proven to be proficient in generating a system where e-filing can be achieved, as can be seen by the following case study:
The Government of Brazil decided to address the critical problem of overloading of litigations in the court, as it was burdened with approximately 2 million cases per year. The Government wanted to address the need of speedy justice. Microsoft came up with an integrated set of technologies which served as a solution to the specific problems at hand. The software company focused on making the system easy to use and driven by consumer need and demand. The system is capable of handling about 30,000 processes a day, which adds up to an estimated 7 million different litigations a year.
The digitization and usage of ICT by courts in Brazil has gained legitimacy after a federal law was passed to that effect in 2006. The judiciary is to achieve the efficiency that electronic filing promises.
b.Security of Identity
A possible obstacle may arise in cases of fraud or other problems but given that the process is online, the verification of identity of a person is made easy. The idea of a Digital India is to make online copies of documents available and this can be achieved by adapting minimalism.
c.Certification of Documents
Documents like say, written statements, affidavits etc. are required to be certified in court for the purposes of admissibility of the same. The same can easily be done online at the time of submission of the documents electronically to vouch for their authenticity.
Benefits of Electronic- Filing
E-Filing and other information and technology sharing initiatives are extremely beneficial to the public as it reduces congestion and delay by doing away with cumbersome processes. It facilitates a unique model of justice which allows an aggrieved party to obtain justice whilst in the comfort of his/her four walls. A large number of judicial processes and justice systems can become well connected if they use electronic systems efficiently.
Conclusion
The electronic system (with special reference to the E-filing of petitions) is one that is achievable and practically implementable as well, as seen by the Government’s efforts to digitise the judiciary. All that is needed is a concrete step toward complete digitisation of processes, which will greatly benefit the judicial system in India.
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
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