Today(26th Sept),The Delhi High Court stated that it lacks the resources and expertise to create a uniform banking code for foreign exchange transactions aimed at curbing black money and benami dealings. It directed that the petition be treated as a representation to the Ministry of Finance, which will consult with the Ministry of Home Affairs and the Reserve Bank of India.
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NEW DELHI: Today(26th Sept), the Delhi High Court highlighted its limitations in preparing a uniform banking code for foreign exchange transactions, which has been advocated as a way to tackle the issues of black money and benami transactions. The court made it clear that formulating such regulations falls outside its expertise and called upon the concerned authorities to examine the matter.
“This court is of the view that it neither has the wherewithal nor expertise to prepare a uniform banking code for foreign exchange transactions,”
– stated the bench, comprising Chief Justice designate Manmohan and Justice Tushar Rao Gedela.
The court directed that the petition advocating for the establishment of a uniform banking code should be treated as a representation by the Ministry of Finance. In addition, the Ministry of Finance is tasked with consulting the Ministry of Home Affairs and the Reserve Bank of India (RBI) on the matter.
The bench emphasized the need for a timely response, stating-
“Therefore, the writ petition is to be treated as a representation by the Ministry of Finance, which is instructed to make a decision on the matter after consulting with the Ministry of Home Affairs and the Reserve Bank of India, through a reasoned order, as quickly as possible.”
With these instructions, the court concluded the petition.
The court’s decision came in response to a Public Interest Litigation (PIL) filed by advocate and petitioner Ashwini Kumar Upadhyay. The petitioner had drawn attention to the existing loopholes in the current system concerning foreign fund transfers. According to Upadhyay, these gaps enable illegal transactions, which could be exploited by various anti-national elements.
Upadhyay’s PIL warned that these unregulated foreign transactions could be funneled toward separatist, extremist, and terrorist organizations. Specifically, he expressed concerns about the misuse of foreign exchange funds by Naxals, Maoists, fundamentalist groups, and other radical organizations operating in India.
The petition sought directives to ensure that payment systems like Real Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT), and Instant Money Payment System (IMPS) are not misused for depositing foreign currency in Indian banks. According to Upadhyay, these tools should be strictly regulated to prevent illegal foreign money deposits.
He raised serious concerns, stating that these loopholes are-
“Not only damaging India’s foreign exchange reserves, but also being used to fund separatists, fundamentalists, Naxals, Maoists, terrorists, traitors, conversion mafias, and radical organizations like SIMI and PFI.”
Upadhyay highlighted the need for uniformity in the way foreign exchange transactions are handled in Indian banks. He emphasized that regardless of the source or the purpose of the funds—whether it is payment for exports, salary deposits, or donations to charity—the process should follow a consistent format.
The petition argued that just as immigration rules are uniform, irrespective of whether a foreigner arrives via business class or economy, the same should apply to banking deposits.
“Immigration rules for visas remain the same regardless of whether a foreigner flies in business or economy class, uses Air India or British Airways, or arrives from the USA or Uganda.”
-he noted, stressing that banking systems should adopt a similarly consistent approach.
“Similarly, deposit details in Indian banks, including foreign bank branches for foreign exchange transactions, should follow the same format, whether it’s export payments in a current account, salary in a savings account, donations in a charity’s current account, or service charges payable in a YouTuber’s account.”
-he added.
Upadhyay’s petition suggested that uniformity should extend to all aspects of foreign exchange transactions, whether the funds are being converted by Western Union or an India-based foreign bank.
The petitioner emphasized the importance of transparency in foreign transactions. He argued that in every case where foreign money is deposited, banks should issue a Foreign Inward Remittance Certificate (FIRC). Moreover, banks should provide a simple way for recipients to obtain this certificate through SMS or other digital means.
“A Foreign Inward Remittance Certificate (FIRC) must be issued, and all international and Indian banks should send a link via SMS to automatically obtain the FIRC when foreign exchange is deposited in the account as converted INR.”
-Upadhyay insisted.
In addition to calling for more robust regulations, the petitioner also advocated for stricter limitations on how foreign entities use Indian banking systems. Specifically, Upadhyay proposed that only Indian citizens or companies should be allowed to conduct transactions using domestic banking channels such as RTGS, NEFT, and IMPS.
“Furthermore, only individuals or companies should be allowed to transfer Indian rupees from one bank account to another within India using RTGS, NEFT, and IMPS, while international banks should be prohibited from utilizing these domestic banking transaction methods.”
-he argued.
To prevent misuse, Upadhyay also recommended that Indian banks, including foreign bank branches operating in India, adopt a set of mandatory disclosures for every foreign transaction. According to his proposal, banks should require critical information such as the depositor’s name, mobile number, International Money Transfer (IMT) details, and the type of currency being deposited.
The petitioner firmly stated-
“Foreign exchange transactions conducted through Indian banks and foreign bank branches in India must include details such as the name and mobile number of the depositor, the type of International Money Transfer (IMT) rather than RTGS/NEFT/IMPS, and the name of the currency.”
