In a move to target big defaulters and fugitives like the PNB fraud accused diamond merchant Nirav Modi and liquor baron Vijay Mallya, the Cabinet on Thursday approved two major decisions — Fugitive Economic Offenders Bill, and setting up National Financial Reporting Authority (NFRA), an oversight body for auditors.

In order to tighten noose around such big frauds, Fugitive Economic Offenders Bill will enable confiscation of assets without conviction in cases where economic offenders flee the country, while the NFRA will be an independent regulator for auditors who are directly or indirectly involved in monetary transactions in any financial institutions.

The new Bill aims to provide an effective, expeditious and constitutionally permissible deterrent to ensure that such actions are curbed and steps can be taken against the culprit. Briefing the media, Finance Minister Arun Jaitley said the Bill would be taken to Parliament for approval in the second half of the Budget Session beginning March 5.

“The Bill defines a fugitive offender as someone against whom a court has issued an arrest warrant for a scheduled offence and who leaves or has left India so as to avoid criminal prosecution, or refuses to return to India to face trial.

The new law is different from the Prevention of Money Laundering Act or PMLA, which also provides for confiscation of assets of economic offenders,” he said.

Once both the Houses pass the Bill, the new legislation will empower investigating agencies to confiscate any property of the absconding offenders without any encumbrances. Under the law, the offender will be disentitled from bringing forward or defending any civil claim. It will also prevent the offender, if he returns to India, from reclaiming any property.

“Under PMLA, only profit of crime is confiscated and that too upon conviction. The new law extends to all assets irrespective of whether it is acquired as a result of crime or not,” Jaitley said.

While explaining why confiscation of assets has been provided for, Jaitley said, “A trial of fugitive will never be complete. The new law will apply the moment warrant is issued and the court decides the man is not submitting.”

The Fugitive Economic Offenders Bill 2017 was first mentioned by Jaitley in his Budget speech in 2017-18, against the backdrop of bringing back Vijay Mallya, who owes over Rs 9,000 crore in the Kingfisher Airlines fraud case.

The Bill, however, primarily empowers the Government and investigating agencies to confiscate property and assets of economic offenders and defaulters who flee India.

The Bill also proposes setting up of a Special Court under the Prevention of Money Laundering Act, which will declare a person a fugitive economic offender.

Besides the Fugitive Economic Offenders Bill, the Government believes that separate regulator of auditing profession NFRA will help track such PNB like frauds in the future. The decision of the Government comes against the backdrop of various auditing lapses in the banking sector, including the Rs 12,700 crore fraud at Punjab National Bank.

“The NFRA will act as an independent regulator for the auditing profession which was one of the key changes brought in by the Companies Act, 2013. This regulator would help in improving foreign and domestic investments as well as support globalisation of business by meeting international practices,” Jaitley said.

The jurisdiction of the NFRA will also extend to all listed companies as well as large unlisted public companies. The regulator would have a chairperson and three full-time members. Besides, there would be a secretary.