Mumbai -To fix whistleblower, bank moves from verse to worse

ALOK DESHPANDE, The Hindu, June 13, 2013 

The Hindu–Embarrassed by revelations about its curious dealings with corporate clients, the Bank of Maharashtra has declared war on whistleblowers. File photo

Union leader Devidas Tuljapurkar faces victimisation and possible dismissal by the Bank of Maharashtra, as it suspects him of being the whistleblower behind a story in “The Hindu” on July 7, 2012.

For one unfortunate whistleblower, things have gone from verse to worse. Embarrassed by revelations about its curious dealings with corporate clients, the Bank of Maharashtra has declared war on whistleblowers. And since it can’t pinpoint them, the bank has gone after internal critics on novel grounds. It has chargesheeted a Union leader and ex-Director of the BoM for acts “prejudicial to the interests of the Bank.” That is, for publishing 19 years ago, a poem it calls ‘vulgar and obscene,’ in the Union’s in-house magazine, ‘Bulletin.’ That poem is the basis of the Bank’s charge sheet against a worker with an impeccable service record.

In 1984, the Marathi poet Vasant Dattatraya Gurjar wrote a satirical poem titledGandhi Mala Bhetla Hota (Gandhi met me) which shook the literary world with its polemical content. In 2013, Devidas Tuljapurkar, General Secretary of the All-India Bank of Maharashtra Employees Federation, faces victimisation and possible dismissal by the bank, ostensibly because the Bulletin, of which he was editor, carried that poem in 1994!

The real reasons for going after Mr. Tuljapurkar appear to have little to do with poetry and seem far more prosaic. He has been a thorn in the flesh of his management. Both, as an alert employee and, for a while, as Workman Director on the bank’s Board. He has also drawn the RBI’s attention to the BoM’s odd handling of some corporate accounts and advances which, he charges, are being favoured at the expense of BoM’s main depositors — lakhs of small farmers, working people and retired employees. But the BoM leadership has something more against him. They suspect him — with no basis or proof — of being the whistleblower behind a story in The Hindu, July 7, 2012. That story exposed how the bank had granted a Rs. 150-crore loan to a defaulter owing BoM Rs. 40 crore by greatly weakening the terms of the original sanction letter. The defaulter company was a part of the United Breweries (UB) group headed by Vijay Mallya. The expose embarrassed Bank Chairman and Managing Director (CMD) Narendra Singh, sparking a whistleblower witch-hunt.

But no whistleblower was found. And after several transfers of senior officers within the bank, the search hit a dead-end. Ironically, it was an unthinking action of the Reserve Bank of India that handed the BoM management a scapegoat: Devidas Tuljapurkar.

Mr. Tuljapurkar told The Hindu, “Last October, I wrote a letter to RBI Governor D. Subba Rao highlighting questionable corporate advances and imprudent banking decisions of BoM at the instance of CMD Narendra Singh.” The letter, written in his capacity as a Union leader, was backed up with facts and documents. Having served as a Director on the Board of BoM from 2004 to 2009, he was very familiar with the rules and procedures.

However, the RBI failed to protect his identity as a whistleblower. In one of those unthinking acts of bureaucracy, the RBI routinely forwarded Mr. Tuljapurkar’s letter to the very BoM management that it exposed, for their comments. The bank had found its scapegoat and Mr. Tuljapurkar’s ordeal began. “Since I had written a letter to RBI, the management assumed that it was also I who had leaked that story about gifting a Rs. 150-crore loan to Mallya’s company. They wanted to corner me, so they started scanning my history,” he says.

And all they could come up with was a poem from 1984. Vasant Gurjar’s poem is a political satire that is scathing about the followers of Mahatma Gandhi who, in the poet’s view, were merely serving their own interests. In 1994, the poem was published in the ‘Bulletin’ the house magazine of the Union. In March 1995, an organisation called the ‘Patit Pavan Sanghatana’ filed a complaint against the Bulletin for publishing the ‘obscene’ and ‘vulgar’ poem. As editor of the Bulletin, Mr. Tuljapurkar was made an accused in the case.

This May 3, 19 years later, the BoM management issued an internal charge sheet against Mr. Tuljapurkar. It accuses him of ‘publishing such an inflammatory, vulgar, obscene and objectionable material in the magazine “Bulletin” meant for bank employees …” And claims that circulating that issue of the Bulletin on the BoM’s premises (in 1994) was “prejudicial to the interests of the Bank.”

Interestingly, the ‘State Performances Scrutiny Board, Government of Maharashtra’, headed by well-known Marathi poet F.M. Shinde, has a very different take on the poem. In January 2011 the Scrutiny Board made it clear that the poem is neither obscene nor vulgar. “What Gandhi had envisioned about Swarajya is nowhere to be seen. The poet has expressed this in satirical form,” Mr. Shinde had said.

Apart from ignoring the Board’s view, the BoM seems to take no notice of the Supreme Court’s order in the case against Mr. Tuljapurkar. “After the FIR in 1995, we approached both the sessions court and the High Court to discharge me from the case. But that was rejected and our appeal is pending in the Supreme Court,” he says. “The apex court, in its order dated July 7, 2010, stayed all proceedings in lower courts in this case and the actual trial has not even started in any court.”

The charge sheet accuses Mr. Tuljapurkar of not disclosing this pending litigation against him while serving as the Workman Director of the bank and for knowingly making ‘false statements’ in the forms of the bank. BoM CMD Narendra Singh took personal interest in the entire matter, says Mr. Tuljapurkar. The CMD placed the 19-year old case before the board meeting in January this year, recommending action against the union leader.

All this sidesteps the truth that Mr. Tuljapurkar’s name was mentioned in the FIR as editor of the Bulletin and not in any ‘personal capacity.’ It also ignores the fact that even charges in the case are yet to be framed. Calls, faxes and emails from The Hindu to Mr. Singh have so far drawn no response.

Meanwhile, an outraged All India Bank Employees’ Association (AIBEA), to which Mr. Tuljapurkar’s union is affiliated, has called for an agitation across the entire BoM on June 17. “We demand immediate withdrawal of the charge sheet slapped against him and thorough investigation of loans sanctioned by the bank to various corporates ever since the present chairman took charge,” CH. Venkatachalam, General Secretary, AIBEA, told The Hindu. He added that the BoM being a public sector bank, every citizen had a right to express concern about its financial health. “We shall fight back any attempt at victimisation.”

If the departmental inquiry against Mr. Tuljapurkar proceeds the way bank management wants, it could result in his dismissal. A whistleblower exposing the questionable actions of a public sector bank could be dismissed for publishing a poem in 1994. He is also a man who, while a director of the bank, transferred all the money he received as sitting charges for Board meetings to the Union’s account via cheque, accepting no monetary benefits as a director.

“I wrote to RBI because I found Mr. Singh’s financial moves unhealthy for the bank’s future. Hence I’m being targeted and victimised. They aim to make an example of me so nobody in future will dare raise his voice. It has to be stopped,” he said.

 

Credit Card issuers in a fix over Aadhaar #UID

 

 

 Mayur Shetty, TNN | Jun 12, 2013, 06.48AM IST

 

MUMBAI: Credit card issuing banks are in a fix over Reserve Bank of India‘s move to consider Aadhaar as an additional factor for authentication of credit card transactions in shops. The reason – a huge investment in upgrading credit card swipe machines and prospects of losing customers in states whereAadhaarenrolment has been slow.

RBI had constituted a working group headed by Pulak Kumar Sinha, general manager, State Bank of India, to study the feasibility of Aadhaar as an additional factor for authentication of card-swiped transactions and the panel is set to submit its report by the month-end.

The scheduled release of the report will coincide with the deadline which RBI has set for card-issuing banks to migrate to EMV cards and PIN-based authentication for transactions by end-June. EMV cards are smart cards that have an embedded chip, while PIN authentications require card users to punch a secret code on the swipe machine every time they pay by card.

Given the uncertainty over whether Aadhaar-based authentication will come into place, banks have been reluctant to make large investments in upgrading their credit card swipe machines. Also, some bankers say that if Aadhaar-based authentication becomes mandatory, some cardholders may drop out since there is a huge section of the population which has not got an Aadhaar number. As a result, some card issuers may end up missing the June 30 deadline for moving toward an EMV- plus PIN-based authentication.While biometric authentication is secure, card issuers say they have issues with it. For one, since fingerprint images require much higher bandwidth, this will add to the communication costs. Secondly, bankers say that authentication typically requires matching of multiple fingers and this uses up bandwidth as well as time. The biggest hurdle is that this will require over seven lakh point of sales terminals and perhaps automated teller machines to be upgraded and would incur capital expenditure running into thousands of crores.

The introduction of compulsory EMV chip cards and PIN confirmation for transactions was proposed in the wake of widespread credit card frauds that took place earlier this year. RBI had told banks in a circular that they should migrate to EMV and chip cards. Bankers feel that there could be some pressure from the government to push Aadhaar as part of banking transactions, which would make it mandatory for cardholders.

Bankers say that although Aadhaar enrolments are picking up on account of it being made mandatory for LPG subsidy, the numbers are still low in large states like Tamil Nadu and Gujarat.

 

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Cash for vote? #Aadhaar #UID

 

 REETIKA KHERA, Frontline

 

The government’s headlong rush to Aadhaar-linked payments for welfare schemes is bound to lead to their disruption and the exclusion of people who need them.

SAJJAD HUSSAIN/AFP 

Residents of the village. The Kotkasim experiment had problems such as poor access to banks, overcrowding, and poor road connectivity. 

AT least three questions come to one’s mind on hearing the news about the government’s big move towards “direct cash transfers”. These are: What are the lessons we can learn from Brazil and Mexico, which are often invoked as examples of successful implementation of cash-transfer schemes? What is new about the government’s announcement? Can cash transfers win votes for the ruling coalition in the 2014 elections? A careful examination of the Prime Minister’s announcement of November 26, 2012, suggests that what is being planned as a big repackaging exercise will boomerang on the rulers in the elections.

The case of Brazil will give us an understanding of what cash transfers actually are. Comparisons with Bolsa Familia, Brazil’s successful conditional cash-transfer programme, are made out of context. In Brazil, cash transfers are one among many social protection measures. Cash transfers were put in place to encourage people to use existing public services. As far as food security is concerned, the Brazilian government is now putting in place systems for the supply of subsidised food that the Indian government is trying to dismantle. In fact, health, education and food are legal entitlements in Brazil. The most important lesson for India from Brazil would be to get on with the enactment of the National Food Security Act, which was tabled in Parliament last December.

Further, Brazil is a very different country—with lower poverty rates, higher rate of urbanisation, near-universal literacy rates and a better administrative capacity. Going by the poverty benchmark of $1.25 as PPP, or purchasing power parity, less than 7 per cent of Brazilians are poor. In India, one-third of the people live below the poverty line. Higher rates of urbanisation (85 per cent of Brazil’s population is urban, compared with 30 per cent in India) means greater access to banks. Given this, it is not surprising that Bolsa Familia has been a big success in Brazil.

No Clear Game Plan

The government’s announcement on cash transfer appears to have been made without a proper road map. For example, it lacked clarity on which subsidies are to be converted to cash transfers. On December 9, the Rural Development Minister said that food would not be included in the cash-transfer scheme. In a written reply in the Rajya Sabha the next day, the Food Minister stated that in fact the failed Kotkasim kerosene model (tried in Kotkasim mandal in Alwar, Rajasthan) was going to be rolled out in six Union Territories and Puducherry. Within a few days, some clarifications were issued, which included a hint that the government was backtracking. It appeared that food and fertilizers were not part of the game plan, whereas scholarships and pension schemes, which are already cash transfers, were part of the plan. When this was pointed out, the government asserted that it was putting in place a new and superior system of making these payments: a micro-ATM network, interoperable and Aadhaar-enabled. As it turns out, in many States, cash for these schemes is already routed through the bank accounts of the beneficiaries. Except for linking bank accounts to the Unique Identification Number (UID) and a different name, there was very little new in the government’s announcement.

In fact, there are three components to the government’s proposal on direct benefit transfers (DBTs): computerisation, extending banking services and linking with Aadhaar. The real potential for changing the game lies with the first two, whereas Aadhaar-enabled transfers carry the risk of excluding current beneficiaries.

The Central government has woken up somewhat belatedly to the transformational potential of computerisation in implementing welfare programmes. State governments have already developed many intelligent applications of this technology. Chhattisgarh has demonstrated that end-to-end computerisation of the public distribution system (PDS) combined with other reforms is a game changer: leakages dropped from 50 per cent to just 10 per cent between 2004-05 and 2009-10, the period during which computerisation was undertaken. Andhra Pradesh’s MIS (management information system) for the National Rural Employment Guarantee Scheme (NREGS) facilitates real-time tracking of all payments at each step. Similarly, payment through bank or post-office accounts provides protection from fraud and corruption. In 2007-08, leakages from the NREGS in Andhra Pradesh were between 1-3 per cent.

Since 2008, it has been mandatory to pay NREGS wages through bank and post-office accounts. The Reserve Bank of India allowed “zero balance” accounts for NREGS workers. This led to the largest financial inclusion drive: more than 80 per cent of job card holders have bank accounts. It is claimed that since Aadhaar is “know your customer”, or KYC, compliant, it will lead to financial inclusion. This is true, but there are two caveats: one, just about a third of the population has an Aadhaar number. Two, the requirements to open a bank account and to get Aadhaar are the same: proof of identity (ID) and proof of address. Aadhaar’s only value addition is that it has an introducer system for those without these documents.

It is claimed that Aadhaar-enabled payments are portable (cash can be withdrawn from any ATM in the country) and interoperable (it can be withdrawn from any bank’s ATM). But portability and interoperability are possible thanks to centralised online real-time environment (CORE) banking, not Aadhaar. It has also been claimed that Aadhaar’s superior “plumbing” will fix delays in payments (such as NREGS wages and pensions). However, the main reason for delays is the lack of accountability. For instance, engineers do not visit worksites for inspection without which payments cannot be sanctioned.

Ghost and duplicate beneficiaries exist in schemes such as pensions and the PDS: benefits are either used by their family or by corrupt dealers. The Andhra Pradesh government’s pension social audit suggests that 1 per cent of beneficiaries were ghosts or duplicates across six pension schemes. The figure is likely to be higher for other schemes, but we do not know the size of this problem. Biometrics (of which UID is only one variety) can weed out such beneficiaries.

Some argue that linking with Aadhaar will reduce corruption. This is possible only in very specific cases. As the Unique Identification Authority of India (UIDAI) itself has admitted, Aadhaar cannot help us identify the poor. What it can help with is to weed out “ghost” names. However, there are other efficient ways of doing this, for example, by computerising records and bringing about greater transparency (pasting printouts of the list of beneficiaries on panchayat walls).

Banking correspondents (BCs) have been used to remedy problems of poor reach of modern banking in rural areas. BCs take cash to the village, and authenticate payments using handheld biometric machines. But first-generation BCs, introduced with fanfare only recently, are now described by the Rural Development Minister as “discredited”. Aside from technical hurdles, extortion and financial viability (because of poor commissions and low volumes) have been issues. A new model (BC 2.0) is being launched with equal fanfare: a million-strong BC network, consisting primarily of front-line government workers (anganwadi and health workers, PDS dealers, cooperative societies, and so on) but also kirana (neighbourhood grocery) stores. A higher commission (3.14 per cent) is suggested. To ensure volumes, all in-kind transfers may be “cashed out”. For food, the Kotkasim kerosene cash transfer model is being tried out. Given the experience of triumphalism preceding rigorous testing, one needs to proceed with caution. In any case, it is not clear whether BC 2.0 needs Aadhaar.

The Kotkasim ‘success’

Even if there is value addition in what is being proposed, the pilot studies conducted so far suggest that there are bound to be teething problems such as poor access to banks, over-crowding and connectivity issues. For example, the government proposes to link NREGS and pensions to Aadhaar. It is now well known that biometrics of the elderly and of those who do physical labour often throw up authentication hurdles. It is unlikely that the elderly, for whom pensions are a lifeline, will take these troubles kindly. Further, these “teething” problems are likely to come up at a crucial time—just before the elections.

In the case of kerosene and liquefied petroleum gas (LPG), the government proposed that consumers buy them at the market prices instead of subsidised prices. The subsidy will be reimbursed into their bank accounts if kerosene is bought. Under the Kotkasim kerosene pilot project, consumers now pay Rs.50/litre of kerosene instead of Rs.15. The balance amount of Rs.35, is supposed to be deposited in their bank accounts. The pilot project was initiated in December 2011, and in the initial months, a crash in kerosene sales was reported. This crash was projected as a success—an indication of how the new system plugged “leakages”.

SAJJAD HUSSAIN/AFP 

A kerosene dealer in Budhi Bawal village in Kotkasim block, Alwar district, Rajasthan, on October 15, 2012. The block was chosen for a pilot scheme in December 2011 to end the sale of subsidised kerosene. 

However, a visit to some villages in Kotkasim suggests that a large part of the crash in sales is actually because many ration card holders do not have bank accounts. This means that their subsidy cannot be reimbursed, and that they have stopped buying kerosene. Even those who have bank accounts have not received the subsidy or have received it erratically. Many of them have stopped purchasing kerosene.

There were other hassles too, such as those relating to bank accounts. Though these were supposed to be zero-balance accounts, some were forced to deposit Rs.500 to open accounts. In some cases, money was deducted if they failed to maintain a minimum balance. Many did not get subsidy at all. Banks are located far away from their houses, and there is very little public transport. At the banks they are not treated very well.

Funnily (or scarily) enough, this nightmare hit the headlines in June 2012 as “a stunning success in stopping leakages”; the business press gave the news “star status” on the basis of the District Collector’s report. The refusal to acknowledge failure is not new, but to project it as a success is certainly new. The Kotkasim experiment shows that while there is no guarantee that delivery mechanisms would be improved, it could end up leading to a collapse of the existing system by driving people out.

Another glimpse of the disruption that linking social welfare schemes with Aadhaar can cause is visible in Jharkhand where the UID-NREGS pilot project began in December 2012. Fingerprint recognition failure, software issues, connectivity and so on have caused repeated disruption. In the capital Ranchi, these problems continue in the three panchayats where it was launched last year. The lack of banking infrastructure, a questionable BC model with mixed success so far, and an administrative capacity that is already overstretched mean that no significant scaling up has been possible.

Aadhaar is being made, de facto, compulsory for welfare schemes. With two-thirds of the population not having an Aadhaar card, many are bound to be denied entitlements. Such reports have already come in from the 20 districts where the pilot study was launched. Things may fall in place eventually, but one can imagine the impact of being denied work or salary—even for a month—because of the lack of an Aadhaar number.

On preparedness, too, there is confusion: 51 districts were chosen for the pilot study reportedly because Aadhaar enrolments in them were high. As per media reports, this is not true. In Rajasthan, the three chosen districts have very low rates of enrolment: Alwar had an enrolment rate of 23 per cent, Ajmer 21 per cent and Udaipur 20 per cent. Similarly in Ramgarh (Jharkhand), two hours from Ranchi and the site of a UID-NREGS pilot project, it was 40 per cent. Low enrolment rates combined with making Aadhaar compulsory can only lead to exclusion of existing beneficiaries.

Also, possession of an Aadhaar number does not automatically guarantee access to any welfare benefits. Today, Aadhaar is neither a necessary nor a sufficient condition to get, say, your pension or scholarship. The fear is that once the programme is rolled out it will become a necessary condition without being a sufficient condition. This, if it happens, will mean that if you are entitled to Rs.200 a month as your old age pension today, you will not get the pension from January if you fail to complete the necessary paperwork by January 1.

Nobody denies that there is huge scope for improving the reach of welfare schemes, especially through computerisation and expansion of banking. However, linking benefits with Aadhaar carries the risk of disrupting schemes even where they work well currently. The poor will be left with the bathwater as the biometric industry runs away with the baby.

Media reports suggest that the government believes that the push towards direct cash transfers will be a “game changer” and even help the ruling alliance garner votes in the 2014 elections. However, on the ground, the rush to Aadhaar-linked payments is bound to lead to disruption of these welfare schemes and the exclusion of people who need them. Shankar Singh’s (of the Mazdoor Kisan Shakti Sangathan) words at Jantar Mantar, New Delhi, are more likely to come true: “You transfer cash, we’ll transfer our votes.”

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#India- Now, penalty for paying credit card dues by cheque! #RBI #WTFnews

 

SUCHETA DALAL | 12/03/2013 , Monelylife, Exclusive

In a mockery of RBI‘s independence, a lowly under-secretary of Dept. of Financial Services has issued a fatwa to government banks to penalise you if you pay your credit cards due by cheque! The under-secretary got this idea from HDFC Bank!
Nearly a month after Moneylife Foundation discovered and took up the issue of the Reserve Bank of India‘s (RBI) bizarre idea of penalising bank depositors for using cheques, we find that the idea or rather the fatwa to this effect had emanated from the finance ministry as far back as 25 October 2012 at the possibly at the instigation of India‘s most profitable bank.

On 25 October 2012, DD Maheshwari, Under Secretary in the Department of Financial Services sent out a fatwa marked “most immediate” to all chief executives of public sector banks (PSBs). The burden of this two-paragraph diktat was that “to discourage the use of physical/cash mode of transactions, all public sector banks are requested to consider charging a processing fee from the customer paying credit card dues either in cash or through cheque”. HDFC Bank has recently increased such charges from Rs50 to Rs100 per transaction and has sent a communication to its customers in compliance with the regulatory requirement of giving a month’s notice.

It doesn’t stop at that, after holding up HDFC Bank’s usurious charges as a role model for PSBs, the letter asks them to “consider issuing appropriate instructions in this regard” and send a “copy of the instructions” back to the finance ministry. 

The finance ministry may have used the word ‘consider’, but its insistence that banks must report back to it shows that it is an order and various banks are planning to fall in line.  The finance ministry’s fatwa makes a mockery of the RBI’s pretence that it is an independent regulator of banks, because the government has not even bothered to refer this issue to the central bank before issuing orders on what amounts to micro-management of bank charges.

RBI deputy governor Dr KC Chakrabarty has repeatedly exhorted customers to vote with their feet and move to another bank if they dislike the high costs and charges of foreign and private banks. It now appears that the finance ministry will forcefully intervene to ensure that they do not have PSBs to turn to.

The government, as owner of PSBs obviously feels it is within its rights to dictate charges, since it is coughing up vast sums of taxpayers money for bank recapitalisation (Rs14,000 crore is set to be pumped into PSBs for their recapitalisation just now). But instead of ensuring better loan recoveries from dubious industrialists such as Vijay Mallya of the UB group, realty companies and others, who owe tens of thousand crores to banks in bad loans, the government has hit upon the idea of punishing legitimate and tax paying bank customers with new charges.

It gets worse. The RBI, which has been lamenting that a large part of the Indian population is unbanked, then responds by setting up an internal committee to prepare a paper titled “Disincentivising Issuance and Usage of Cheques”. This was put up on its website and open for public comment until 28th February. The report itself was kept low-key and been ignored by the mainstream media almost entirely.  Moneylife had then pointed out that the plan to levy a series of punitive charges on the use of cheques, with the utopian objective of forcing people to use online money transfer facilities (such as NEFT and RTGS which are also charged) only punishes those with legitimate bank customers. Please read RBI Must Scrap No Cheque Idea, which is the most commented article in Moneylife since then.

Moneylife Foundation, which has over 21,000 members has sent a detailed memorandum to the RBI on behalf of depositors.

A senior banker who writes for Moneylife under the pseudonym Gurpur also said that the RBI report on Dis-incentivising Issuance and Usage of Cheques “is a classic example of putting the cart before the horse. Because there are problems galore in the electronic payment system, and even before stabilising this, the RBI wants to dispense with the cheque system”. See Incentivise usage of electronic payment systems before dis-incentivising usage of cheques.  Gurpur followed it up with another article that pointed out how the UK had bowed to public pressure given up the idea of abolishing cheque usage. See UK govt bows to public pressure-rejects abolition of cheque system. Will RBI follow suit?

Moneylife had said, “The report on stopping the use of cheques makes you wonder whether RBI is accountable to us or exists solely to help banks enhance profits at the cost of customers, under the guise of seemingly lofty objectives”. Ironically, the finance ministry’s order makes it clear that it swings to the tune HDFC Bank.

Source- http://www.moneylife.in/article/now-penalty-for-paying-credit-card-dues-by-cheque/31536.html

#India- The Vanishing Crores- massive swindling in the Rs74,000-crore farm loan waiver

 

 

 

Devinder Sharma, March 7, 2013:

 

The financial outlay is not matching the outcome. If institutional credit is not reaching the farmers, where is it going?

 

 

Following the disclosure by the Comptroller & Auditor General (CAG) of the massive swindling in the Rs74,000-crore farm loan waiver, announced in the 2009 budget with a lot of fanfare, the entire provisioning of the farm credit allocations have come under a cloud.

Roughly 8-10 per cent of the beneficiary farmers, which means no less than 35.5 lakh farmers did not get any advantage of the loan waiver, and similarly a large number of undeserving farmers walked away with the exemption to repay.

This exposure comes at a time when questions are being asked about who benefits from the significant increases in farm credit being provided for in every budget. In 2012-13, a budgetary provision of Rs 5,75,000-crore for farm credit was made. A year earlier, in 2011-12, Rs 4,75,000-crore was provided. According to Reserve Bank of India, between 2000 and 2010, farm loans increased by 755 per cent. Certainly this is a mammoth growth, and it provides all the reasons to cheer.

This year, finance minister P Chidambaram further enhanced the budgetary allocation for farm credit to Rs 700,000-crore. This is certainly a quantum jump. It gives an impression as if such large availability of farm credit is serving the small and marginal farmers very well, and that all is well on the farm front.

But somehow the growth in the disbursement of farm loans does not match with the real performance on the ground. With over 2.90 lakh farmers committing suicide in the past 15 years, and with another 42 per cent farmers wanting to quit agriculture if given a choice, the continuing agrarian crisis on the farm front is a clear indication that the massive farm credit year after year is either not reaching the beneficiaries or being thoroughly misutilised.

The outlay is not matching the outcome. If institutional credit is not reaching the farmers, where is it going? Time and again we have heard that agricultural credit plays an important role in improving farm production, productivity and mitigating farmer’s distress. Such exuberance in loan disbursal comes at a time when in a recent study on ‘Farm Credit’, the industry association Assocham analysing the disbursement of credit over the last decade, has listed misdirection in farm loans, increase in proportion of indirect credit by banks, misuse of interest rate subvention for diverting credit to other sectors, imbalances in quantity of credit in relation to size of the farm and crops they raise, and virtual exclusion of small and marginal farmers from institutional credit as some of the major problems besetting this sector.

Mute spectator

If you have underlined the last point in Assocham report, it tells us very clearly where institutional credit has failed to deliver. By excluding small and marginal farmers, which forms nearly 80 per cent of the agricultural workforce, hasn’t the government actually failed to reach the benefits to those who need it more? How can the Reserve Bank of India be a mute spectator to the visible misdirection, which in reality should be more visible to them, all these years? Isn’t it a callous oversight or is it deliberate?

A damming news report in a Hindi daily brought out startling reality. According to the report, a confidential document available with the ministry of finance categorically states that despite the increase in farm credit by over 2.5 times in past five years, less than 6 per cent of the total institutional credit is made available to small and marginal farmers. Ironically, the prime minister, the finance minister, the agriculture minister and the ruling party along with its army of economists and planners never get tired of telling the nation of the remarkable strides taken in reaching credit to small and marginal farmers.

In other words, less than Rs 50,000-crore of the Rs 7 lakh crore provided for farm credit will actually benefit small farmers. Remaining amount of Rs 6.5 lakh crore at 4 per cent interest will be misappropriated by agribusiness companies, warehousing corporations and state electricity boards. Why can’t the finance minister therefore segregate the farm credit to tell us how much of it actually goes to farmers, and how much in the name of farmers to other allied activities?

In 2007, of the total credit of Rs 2,29,400-crore advanced by banks, small farmers share was a mere 3.77 per cent. In other words, 96.23 per cent of the farm credit disbursed in 2007 was actually cornered by big farmers or agribusiness companies. In 2011-12, while total farm credit had swelled to Rs 5,09,000-crore (against a target of 4,75,000-crore) small and marginal farmers got only 5.71 per cent. It is therefore obvious that despite knowing where the fault lies the government had deliberately supported agribusiness companies (an increase in indirect credit by banks by enlarging the definition of agriculture) in the name of small and marginal farmers.

It is primarily for this reason that small farmers have been left high and dry. They are left with no choice but to depend on the money lenders who charge exorbitant interests. No wonder, the serial death dance on the farms in the form of suicides show no signs of ending. It has a lot to do with the non-availability of institutional credit.
(The writer is a noted food and agricultural policy expert)

 

 

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#India- Your Aadhaar data is being misused by banks #mustshare #privacy #UID

Couple in Colaba were shocked when a bank sent a letter to their 10-yr-old daughter, without their knowledge or consent, saying an account had been opened in her name with details taken from UID

January 24, 2013

MUMBAI

Naveen Nair

Heading out to enroll for a unique identity? Think twice before you provide your personal details while filling out the forms: the possibility of your personal details being leaked to a third party cannot be ruled out.

1: Applicants submit personal information of their family in the UID application form

Take for instance this couple based in Colaba, who were alarmed when a letter (see pic) arrived at their doorstep last week from the Indian Overseas Bank (IOB). It was addressed to their 10-year-old daughter, and claimed that a Savings Bank (SB) account had been opened under her name.

2: UID centre forwards the information to banks

The family is now racked with anxiety, having no clue how their personal data reached bank officials without their knowledge or consent. While the bank officials claim that the data is directly sent to them by the central government, UIDAI (Unique Identification Authority of India) officials say that no such information is forwarded to the banks without the consent of the applicant.

3: Bank uses the information to open accounts and then informs the customer about it. Graphics/Amit Bandre

Surprise package
Reshma Puri and her daughter Anamika (names changed on request) had applied for Aadhaar cards around eight months ago. Both already had existing accounts with banks other than IOB. Imagine their shock last week when the mailman delivered the letter from IOB. The letter, posted from the Nariman Point branch of IOB, claimed that an SB account in Anamika’s name had been opened on October 13, 2012, based on her Aadhaar details. The letter further requested her to visit the branch within 15 days armed with her Aadhaar ID card, to complete the procedure and activate the account.

A worried Reshma said, “The current accommodation we live in is provided by the government, and is thus transferable. My husband and I were both present when we applied for our daughter’s Aadhaar card, and we made sure that all the details were entered correctly. We are sure that we did not give any consent for an account to be opened for our daughter in any bank.”

She added, “We are surprised to see that our personal details have reached IOB officials, and they have forcefully opened an SB account. How can the UIDAI decide to share our data with a random bank and what if the provided data is misused? Aren’t we risking our personal security by providing our personal details during enrolment?

It is a kind of spam wherein the government and its subsidiaries are misusing our private information.” The final paragraph of the letter from IOB letter further requests the applicant to furnish the names, addresses and occupations of friends and relatives, particularly those staying abroad, so that the bank may contact them.

Spam or data theft?
Acknowledging the concerns raised by the Puris, Vijay Mukhi, a cyber expert, said, “I don’t believe that the government directly provides such data to any banks, it is lower rank officials working at private agencies to whom the UID data collection work is outsourced. It is the sole responsibility of the government to ensure that it is not leaked.”

Asked if the use of private information for marketing activities would fit the definition of spam, Mukhi said, “Spam is a smaller issue, this is a clear-cut case of data theft and should be looked into more seriously.” He suggested that the government implement measures that prevent others from copying such information from the database.

Reshma further explained that since their current residence is transferable, any such letter addressed to her daughter may arrive at the address in future in their absence, and a stranger may use the letter and operate the account facilities using forged documents.

Bank clarifies
H Mahadev, regional vigilance officer (RVO), IOB, said, “The central government started this process of opening accounts linked to a person’s Aadhaar details about five months ago. The sole purpose of opening these accounts is to channelise the subsidies provided by the government to the Aadhaar cardholder. These accounts are generated directly and accommodated into our system and then bifurcated to respective branches based on the applicant’s residential address.”

He added, “The accounts are generated based on the consent provided by applicants at the time of his Aadhaar enrolment. If the applicant does not wish to operate this account, he or she should submit a letter mentioning the same.” Asked why details of friends and relatives were requested in the same letter, Mahadev said, “This is not part of the instruction provided by the central government. The respective branch may have included these requests as a part of their promotional activity.”

An official from the Nariman Point branch confirmed issuing a letter to Puri, saying, “We have received nearly 6,000 sets of data from our regional office and have randomly circulated letters to all the residents in our ward. Usually the account is expected to be opened in the name of the family’s head in order to avail of the government subsidy. Nearly 2,000 accounts have been activated and most of them are for local fishermen, who are likely to get their first subsidy by the year end.” Asked how a minor was sent the letter, the officer blamed it on system error, saying they are computer generated.

UIDAI’s take
Gurudutt Ray, assistant director general, UIDAI, said, “The central government does not directly open any accounts in a random nationalised bank. We do direct the banks to open an account linked to the Aadhaar details, if the applicant provides his consent for the same. In this case the applicant may have selected the option for opening a bank account linked to his Aadhaar number and IOB being in their vicinity, could have been directed to open the account.” Ray denied that personal data related to applicants is being provided to banks. He claimed that applicants have no obligation to activate the account.

Lawyers explain
No bank can unilaterally set up an account for you. In the case of minors, the guardian’s consent is necessary. If there is no consent, either express or implied, there is no way that an account can be set up that is basic contract law.
Aditya Ajgaonkar, Advocate

There are know your customer (KYC) norms framed by the Reserve Bank of India which clearly say the customer has to open a bank account. Moreover, how can they open up a bank account which has no initial deposit in it?
Jabbar Shaikh, Advocate

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“Aadhaar” of Direct Cash Transfer is more of assumptions, less of ground-level realities #UID #MUSTREAD

14 DEC, 2012,

The government announced that from January 2013, 51 districts of the country would be subjected to Aadhaar– based direct cash transfers (DCT). We need some basic answers before we get to term the initiative as a game-changer.

Nilekani’s idea in differing conditions, with focus on testing the system under stress conditions.

Quick-fix solutions?: The latest fix is through the new improved micro ATM architecture where BCs sort out the last mile. Technology provides a fix on authentication and transaction recording. This assumes that the physical connectivity between the branch and the customer through the intervention of a human being fixes the issue.But the cash has to be delivered physically. With 1,50,000 post offices, and postmen visiting all the habitations regularly, with an instrument of money order, we have not been able to sort out the problem of transferring the cash from the coffers to the beneficiaries.

The finance ministry has not convincingly established the business case for a BC. Do we have an idea how a BC would do it better? The answer would be in commissions and incentives. Agreed.

But where is the business case to the banking institutions if these costs are loaded? Does it work at scale?

Too much is loaded on to a single intervention, involving commercial institutions, without a strong business case.

The approach of the government is worrisome. It may be a part of the measures in the run up to the 2014 election is the simplicity with which the solutions are offered. That the entire country can take a single solution; that the solution can be offered through the banking system; that the only impending problem was establishing identity; and that Aadhaar will sort out issues much more than identity and fix leakages and petty corruption.

The commercial sector would have looked at this through the lens of segmentation, test marketing and local strategies. The government believes in standardisation and scale.

Even if Aadhaar number is subjected to multiple pilots in several locations, it is difficult to imagine how these pilots have informed this aggressive rollout of cash. This space is getting to be interesting and we need to watch for more action.

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EXCLUSIVE – How Wal-Mart got a foot in the door of India’s retail market

Wed, Dec 05

By Nandita Bose

MUMBAI (Reuters) – Wal-Mart Stores Inc (WMT.N) prepared its entry into India‘s supermarket sector in 2010 with a $100 million investment into a consultancy with no employees, no profits and a scant $14,000 in revenue.

The company, called Cedar Support Services, might have been a more obvious selection four months earlier: it began its corporate life as Bharti Retail Holdings Ltd, according to documents filed with India’s Registrar of Companies.

The Cedar investment is now the focus of an investigation by India’s financial crimes watchdog into whether Wal-Mart broke foreign direct investment rules by putting money into a retailer before the government threw open the sector to global players.

Wal-Mart said it was in compliance with India’s FDI guidelines, and had followed all procedures. It said the central government had sought “information and clarification”, which Wal-Mart has provided.

However, several lawyers said the transaction appeared to violate at least the spirit of India’s long-standing ban on foreign investment in supermarkets, which it only lifted in September 2012. When Wal-Mart made the investment in 2010, it was legal for foreigners to own consultants but not retailers, so the shift in Cedar’s business description raised eyebrows.

“This is a complete camouflage,” said Hitesh Jain, a senior partner at ALMT Legal in Mumbai who advises retailers but is not involved with Wal-Mart. “It can be looked at as a violation of FDI rules because Cedar also operates supermarkets, which was a restricted sector back then.”

Graphic on Wal-Mart’s investment http://link.reuters.com/myp44t

Graphic on India’s retail market http://r.reuters.com/cuh79s

The law, however, is murky.

Others stressed that the way Wal-Mart structured the transaction might make it legal. According to the documents filed with India’s registrar, the investment was in the form of debt that was convertible into equity. That clouds the issue of whether Wal-Mart took a stake in Cedar or provided financing.

Bharti and Wal-Mart both declined to provide additional details on how the transaction was structured.

Senior government officials told Reuters that the RBI had asked the Enforcement Directorate, which investigates financial crimes, to look into whether Wal-Mart violated the law by investing in a supermarket retailer before foreign investment rules were relaxed.

If Wal-Mart did break the law, it could face a penalty of up to three times its initial $100 million investment, they said.

That would not only be a setback for Wal-Mart, it would also weaken consensus-building efforts by India’s minority government, led by the Congress party. The party is desperate for more support from across the political spectrum after its decision to let foreign players into India’s retail market came under fire from the opposition and even some of its own allies.

Wal-Mart and other retailers lobbied for years to gain access to India’s market, lured by the promise of a middle class that will one day rival China’s. But local opposition has been fierce because of concern that Wal-Mart and its peers will knock millions of mom-and-pop stores out of business.

COMPLEX WEB

Reuters pieced together details of Wal-Mart’s investment in Cedar by examining records from India’s Registrar of Companies and through interviews with government officials involved with the matter, as well as several lawyers who work with retailers.

The documents reveal a web of companies set up under the Bharti umbrella, which runs India’s largest telecom operator, Bharti Airtel (BRTI.NS). The group, which also has retail interests, signed a joint venture with Wal-Mart to run wholesale stores in 2007, shortly after India allowed full foreign ownership of wholesale retail operations.

That same year, the Bharti group formed Bharti Retail Holdings Ltd, which in turn owned a subsidiary called Bharti Retail Ltd which operated supermarkets and hypermarkets.

In December 2009, Bharti Retail Holdings changed its business description to consulting services from retail, the documents filed with India’s Registrar show. A month later, the company changed its name to Cedar.

The timing of the change in name and business is significant because when Wal-Mart invested in Cedar in March 2010, foreign companies could legally own 100 percent of an Indian consulting firm but not a supermarket retailer.

Cedar issued “compulsorily convertible debentures” to Wal-Mart Mauritius Holdings Co Ltd, which would be exchanged for 49 percent equity 18 months after the issue date. The conversion date has since been pushed back twice, to September 2013, which would be after India’s relaxation of rules on retail investment.

Cedar’s cash flow statement for 2010 shows that the funds raised from the debentures were used to finance activities and an attached schedule to the balance sheet shows a transfer of 1.75 billion rupees to its retail unit, raising questions over whether Wal-Mart’s money went into the retail business.

M.P. Achuthan, a communist member of India’s parliament, has accused Wal-Mart of breaking the foreign direct investment law and said he wanted the company to be penalised. Achuthan also wants India to scrap its foreign retail investment policy.

“I am surprised and shocked that the government didn’t see this. This kind of an investment could not have happened without the government’s knowledge,” Achuthan said. “It is impossible.”

Wal-Mart’s Indian partner, Bharti Enterprises, said it had followed the rules but did not address specific questions emailed by Reuters.

“We are in complete compliance of all regulations. All details have been shared with the relevant authorities,” a Bharti Enterprises spokesman said.

Two senior government officials said there had been an initial round of communication between the Reserve Bank of India and the Enforcement Directorate. The RBI asked the law enforcement agency to conduct the investigation.

“RBI believes there is a need to investigate,” said a senior government official, who spoke on condition of anonymity because of the sensitivity of the matter. He said both Wal-Mart and Bharti were being investigated because “Wal-Mart allegedly made the investment and Bharti allegedly received it”.

Separately, Wal-Mart said last month it was looking into bribery allegations in several countries including India, Brazil and China. It conducted an earlier probe in Mexico.

DEBT OR EQUITY?

Prime Minister Manmohan Singh is under intense pressure to roll back the decision to permit foreign retailers. Parliament ground to a halt on November 22 over opposition to the reforms until the government agreed to a vote, set for Wednesday.

A year ago, political pressure forced the government to make a U-turn after it first approved foreign investment into supermarkets, an abrupt shift that brought into question India’s ability to build consensus behind long-awaited reforms.

When Wal-Mart made the investment in Cedar in 2010, Indian law permitted foreigners to own “cash-and-carry” wholesale stores, but they were barred from owning what India calls multi-brand retailers, or stores like Wal-Mart’s namesake supermarkets that sell a wide array of products and brands.

Whether the investment in Cedar violated India’s law depends on two issues, according to the lawyers: if Cedar was in fact a retailer rather than a consultancy, and how the investment was structured.

Cedar’s articles of association filed with the Registrar show it called itself a consultancy, but a few pages later it describes a “competing business” as one involved in retail and operates supermarkets, hypermarkets and discount stores.

Even if investigators determine Cedar was a retailer, lawyers said Wal-Mart’s investment may still be legal if the transaction is deemed to be debt. Wal-Mart could then argue that it did not acquire a stake but instead extended a loan.

But according to RBI guidelines set in 2007, compulsorily convertible debentures are considered equity. That would mean Wal-Mart jumped the gun, said Alok Dhir, managing partner Dhir & Dhir Associates.

Dhir said there may be one way around that problem. If Wal-Mart and Bharti included a “put” option on the debentures, it could be considered debt because Wal-Mart would no longer be required to convert the debt to equity.

It is not clear whether this transaction included such a clause, and Wal-Mart and Bharti declined to comment.

LOOPHOLES

Under Indian law, Wal-Mart can be found in violation even if each step it took was within bounds. If the combination of those actions led to a result that circumvented the law, a court can consider the bigger picture, four lawyers said, citing a 1985 Supreme Court of India decision.

However, there are numerous grey areas.

For example, the RBI does not require Indian companies to declare what they do with money they receive from foreign investment.

“Even if the investigation is able to prove that funds were invested into the retail business, the companies can say they are not legally bound to declare it and present an argument,” said Ravi Singhania, managing partner at law firm Singhania & Partners.

The fact that Wal-Mart’s investment was capped at 49 percent and would not give it majority control of Cedar after the debt is converted could also help the companies build a case that the investment was legal.

The rules allow Indian-owned and controlled companies to use foreign capital to fund businesses which their subsidiaries operate. However, lawyers said there is no clarity on whether it is a breach if the unit of the Indian entity operates in a restricted sector, which supermarkets were until September. (Additional reporting by Satarupa Bhattacharjya in New Delhi and Jessica Wohl in Chicago; Editing by Emily Kaiser and Mark Bendeich)

—
“To those who believe in resistance, who live between hope and impatience and have learned the perils of being unreasonable. To those who understand enough
to be afraid and yet retain their fury.”

 

RBI to banks: Don’t deny education loans based on location #goodnews #mustshare

by FP Staff Nov 9, 2012
If you are a student, looking for an education loan, you have some good news. Well almost. The Reserve Bank of India (RBI) in it’s notification has warned banks to not reject education loans to students just because the student does not fall under the bank’s service area.

Why: Because RBI has been been receiving a number of complaints where students have been refused educational loan as the residence of the borrower does not fall under the bank’s service area.

RBI has asked banks to issue suitable instructions to all their branches for meticulous and strict compliance of these guidelines. Reuters

Exemption: However the central banks also clarified that the service area norms are to be followed by banks in case of Government sponsored schemes for education.

What: RBI has asked banks to issue suitable instructions to all their branches for meticulous and strict compliance of these guidelines.

In mid August, Finance Minister, P Chidambaram had said to various Public Sector Banks, that education loan is a right of every student.

And, if any PSU banker was found rejecting a large number of education loan application, they could be penalised for rejecting the application.

Looks like, education loans norms are becoming student friendly, one step at a time.

 

Anonymous India Calls for Non-violent Protests Against Censorship

Added 29th May 2012

John Ribeiro

The Indian arm of Anonymous is planning what it describes as non-violent protests against Internet censorship in various Indian cities, after some Internet service providers blocked file-sharing sites in the country.

The protests, planned for June 9, follow a court order in March directed at ISPs, meant to prevent a newly released local movie from being offered in a pirated version online. Some ISPs went ahead and blocked some file-sharing sites altogether, rather than the offending URLs.

One such ISP, Reliance Communications, found its service was tinkered with last week, redirecting its users from sites like Facebook and Twitter to a protest page, according to reports from users. The hackers also claimed to have attacked the website and servers of Reliance, and claimed to have got access to a large list of URLs blocked by the company.

Reliance Communications said on Monday it had thoroughly investigated the matter and all its servers and websites are intact. “We have required preventive measures and strongest possible IT security layers in place to tackle any unwarranted intrusions,” the company said in a statement. “Despite repeated attempts by hackers, our servers could not be hacked.”

The hackers also claimed to have attacked websites of the Bharatiya Janata Party, the main opposition party in the country, after having previously launched DDoS (distributed denial of service) attacks on various websites including that of the Indian central bank, Reserve Bank of India.

Anonymous was active in India last year, when it attacked the website of the Indian army. It quickly reversed its decision to attack the site and kept a low profile after drawing protests from some of its own members.

Anonymous is asking supporters to download and print cut-outs of the Guy Fawkes mask, used by the hacker group as a logo, to be worn during the anti-censorship street protests.

The group’s protests are also directed at India’s Information Technology Act, which among other things allows the government to block websites under certain conditions, and also allows the removal of online content by notice to ISPs. The government is in the process of framing rules that will put curbs on freedom on social media, Anonymous said in a recent video, presumably a reference to demands by the government that Internet companies should have a mechanism in place to filter objectionable content, including content that mocks religious figures.

India’s Computer Emergency Response Team observed last week that hacker groups are launching DDoS attacks on government and private websites. These attacks may be targeted at different websites of reputed organizations, the agency said in an advisory. The attacks are being launched using popular DDoS tools and can consume bandwidth requiring appropriate proactive action in coordination with service providers, it added.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. John’s e-mail address isjohn_ribeiro@idg.com