Why The Governor of RBI is guilty of this bloodbath?
[P.S: This article is in continuation of my
previous series of articles starting with the article titled Indian
Media is Insensitive..here where I had pointed out how
increasingly E banking frauds are affecting the health of
banking victims and why certain persons should be
considered responsible for the bloodbath ].
In the previous articles we have stated how
in India Banks are trusted by people to place their hard earned
savings and how when this is robbed in an E Banking fraud, the
victims get into medical problems and possible death, suicide
etc. It is the objective of this series of articles to draw the
attention of all those who are directly or indirectly
responsible for this bloodbath and highlight their respective
contributions to this sad state of affairs. In the earlier
articles we have covered the role of Bank chairpersons and CISOs
of Banks. In this article we highlight the role of RBI. So far
my attempts to draw the attention of the Governor of RBI on this
problem has failed. I hope that at least this article will
probably open the eyes of the Governor.
Reserve Bank of India is by law the custodian
of the interests of Bank customers in India. It is expected to
regulate the Indian Banking system. We the customers of Banks
consider that "Banking" as a service is "Acceptance of Deposits
repayable on demand or otherwise". We know that the Banks lend
our money and make profits. We also understand that "Profits"
are essential for us to get a suitable return. We are however
sad that our returns are is dwindling day by day while the cost
of Bank services are always increasing. RBI once told that there
is computerization in Banks to reduce the cost of Banking but we
now know that Computerization has only increased the cost of
Banking. Besides, Computerization has hit at the very root of
Banking by eroding the safety of our funds through the various
types of E Banking frauds. The responsibility for
introducing and encouraging the use of E banking lies with the
RBI and hence the responsibility for the loss suffered by
customers also lies with RBI.
To be fair to RBI, way back on June 14, 2001,
RBI made it clear in their circular on Internet Banking that the
losses arising out of E Banking frauds are the responsibility of
Banks and they should take appropriate insurance. This was again
reiterated when revised guidelines on E Banking security were
issued on April 29, 2011 following the recommendations of the G.
Gopalakrishna Working Group report (GGWG).
However, RBI has failed in ensuring that its
own recommendations are followed by the Banks and here in lies
the negligence, incompetence and liability of the Governor of
On 3rd August, 2011, the
M. Damodaran Committee came with a report on customer
service and made several recommendations that had a bearing on
softening of the E Banking Fraud impact on the customers.
However, RBI is yet to formulate its recommendations on the
report because the IBA and the Banks are not in favour of the
report. It is a shameful situation for the RBI to be in a
position that it no longer has the authority to administer the
Banks and the responsibility for the same should lie with the
Governor of RBI.
RBI has set up a Banking Ombudsman scheme
which should have helped at least in some cases of E banking
frauds. But unfortunately the scheme has been diluted to the
extent that it is unable to take any corrective action in case
of E Banking frauds.
In recent days, Naavi has directly demanded
RBI about the following.
1. Internet Banking license of Banks
which have been proved to be negligent in E Banking
administration must be withdrawn. A specific request in this
regard was made in respect of ICICI Bank Tirunelveli branch
and PNB, T Nagar, Chennai branch.
2. RBI should recognize that E Banking
frauds in which fraud money has been credited to accounts in
different banks are clearly money laundering transactions
and indicate failure of KYC norms. RBI should therefore fine
such Banks at the rate of Rs 5 lakhs for each failure
and create a "E Banking Fraud Guarantee Fund" to pay the
victims without the need for any other formality.
3. RBI should designate the Internet
Banking as it exists now as a "Non Banking Finance Activity"
and take it out of the purview of Banking.
The requests have gone to the highest levels
in RBI including the Governor. However there is no response on
Naavi has also brought to the attention of
RBI that there is a serious flaw in the Internet Banking
security arising out of Man in the Browser attacks and RBI
should take some corrective actions immediately to prevent the
possibility of a Cyber Terrorist attack on Indian Banks.
However all these efforts have been met with
a stoic silence from the authorities.
Under these circumstances, Dr D. Subba Rao,
the Governor of Reserve Bank of India must be considered as
having failed in his duty to protect the interests of the
Customers of Indian Banks who are seeking a safe banking
platform. The blood of the E Banking victims is therefore all
over the hands of the Governor of RBI.
I am aware that my words are painful for some
of the executives of RBI who are clearly on the side of the
Customer and are trying to do their best to improve the
situation. However they are unable to bring any improvements
since they donot have the support from the top. Hence the
responsibility for the proliferation of E Banking Frauds has to
squarely rest on the Governor of RBI.
I wish some body files a PIL against the
Governor of RBI and demands corrective action to restore
security in the Indian Banking system.
(To be continued)
1. Indian Media is Insensitive..here
2. Blood of Bank fraud victims are on these hands...
Why CISO's of Banks will be guilty of murder
February 26, 2012