What ITA 2008 lacks

I draw attention to today’s article in Hindu highlighting the plight of two Air India employees who have been charged under Section 66A and 67 following a complaint motivated by union rivalry.

It is stated that the Police in this case had arrested the accused from their homes in violation of Section 80 of ITA 2008.

The Police appear to have acted under the influence of some vested interests and exceeded their legal authority. Though the charges may be dismissed by the Court in due course, the accused has already been subjected to great inconvenience so far and will continue to suffer damages in various form to their reputation as well as their career prospects by virtue of the police excesses.

These are issues that are normally taken up under the Human Rights Violation.

However, for better relief, it is necessary that ITA 2008 itself should have a protective clause making police responsible and punishable for wrong use of the Act. In every case under ITA 2008, it should be mandatory for the Court to take a view on whether the charges were justified and if not, there should be a mandatory punishment for the police personnel involved. It could be token punishment in certain cases but where “Unjustified Arrest Without Warrant” is involved, there should be a more serious punishment.

Naavi


New Bank Licenses, Eligibility Evaluation

We have discussed in general the issues that dominate the challenge before the RBI in determining who amongst the 26 Banking license applicants should be given the licenses.

To start with, there are divergent views on how many licenses need to be issued. At one end of the spectrum, some feel that there is no need to start with a restrictive frame of mind since India needs many more Banks. However, conservative observers feel that there is a need to ensure that only a few licenses need to be issued. Banking is a sensitive industry and even “Competition” is harmful if it reaches undesirable levels. We are all aware how the NBFC sector was irretrievably affected by companies like CRB Capital which in its greediness to grow offered 17% p.a returns on fixed deposits and dragged the whole industry into disrepute.  Even today, many of the private Banks suffer because they compete too aggressively on advances.

It is necessary for us to distinguish Banking from Money Lending. Money lending is done with own funds and the money lender can be as aggressive as his capacity to lose permits him. He can also expect usurious rates of return to compensate for his risks.  He can also mobilize bulk deposits from friends at higher than market rates as long as they are aware of and partake the risks. Banking is different. It is essentially a means for channelizing public savings. Hence “Safety of Deposits” assumes priority. This requires conservative approach to lending. Too much of aggressiveness in lending is therefore harmful. Similarly for Banks, too much of aggressiveness in deposit mobilization offering impractical rates of interest is also undesirable.

The capability of the licensees to do successful Banking therefore needs to be assessed with this basic distinction in mind as to whether the licensee is likely to be a “Good Banker” and not whether he can be a “Good Money Lender”.

In order to develop some objective frame of reference to evaluate the 26 applicants, I have listed the following 14 criteria for evaluation.

1.Vision
2.Capital Adequacy
3.Financial Inclusion-

(a) Deposit Mobilization
(b) Retail Lending
(c) Services

4. Priority Sector Lending
5.Managerial Capability
6.Conflict Possibility
7. Managerial Reputation
8.Foreign Interests
9.Technological capability
10. Cultural Compatibility
11. Investor Friendliness
12. Security of Deposits
13.Manpower availability
14.Crisis Management Capability

It is possible that different analysts may adopt different criteria for evaluation and RBI may have its own criteria. But eventually there will be some commonalities in the parameters to be used for evaluation. Out of these parameters there could be some on whom an external analyst may not be able to get proper information to make an objective evaluation. Hence there could be some subjectivity in the evaluation. However when we create a matrix of parameters like above we are likely to reduce the effect of subjective bias and hence this approach is considered better. It is possible that some analysts may consider that some more parameters should be added to the above.

I will also try to expand the scope of each of the above parameters in some subsequent articles.

I invite suggestions from the public on whether we need to add any more parameters to the above. Readers may also take a second look at the previous related articles listed below for more information.

15: IT Companies vie for business from New Banks

14: RBI Faces first challenge in Bank Licensing on Aditya Birla Group and Conflict of Interest

13: Naavi’s proposition on Sanctions on Banks is reflected also in the EU Guidelines

12. New Banking Liensees-Beware of IT Companies who want to trap you

11: New Banking Licenses in India

10. The Thief who stole Rs 286 crores from Banks coming to India

Here is a slist of first set articles so far placed on the website.

1. Should Indian Post be granted Banking license?… Do they need one?

2.Which of the 26 applicants deserve Bank license

3.Banking License aspirants should disclose business plans to public.

4.Will RBI disclose “Sanction Mechanism” to enforce sanctity of Banking license conditions?

5. Not all Eligible applicants to get Banking license

6. New Bank Licenses-Make Cyber Crime Insurance Mandatory

7. “Deep Pockets” need not be the sole criteria for Bank licenses

8.Banking Licenses and Public Sector aspirants

9. New Banking License-Let’s remember Gandhian Principles of Banking

 

Naavi


IT Companies vie for business from New Banks

Even before the decision on which of the 26 applicants will get Banking license, Infosys, TCS and Oracle are vieing with each other for supply of Core Banking software to the new Banks.

It is estimated that each Bank will spend about 25-50 crores in initial networking costs and subsequently spend about 5 to 6% of the annual revenue in maintenance. It is therefore a huge business for the IT Companies.

Refer Article in HIndu Business Line for more

Naavi


Loan Through SMS ??

There is an interesting website on the cyber space which promises all kinds of loans for which application can be made through SMS.

Check this interesting website http://www.cgtmse-govt.in

The site sports photographs of all Congress leaders including Mrs Sonia Gandhi, Dr Man Mohan Singh, Mr Pranab Mukherjee etc and claims to be a site of the Government of India.

Applications are sought through SMS at 09748643575

An investigation is required to find out if this is a fraudulent website and if so who is behind this fraud. The site is registered by a person in Siliguri and freely uses all Government symbols for promotion. It is possible that this could be another scam in which some of the politicians are involved.

Naavi
 

Mumbai High Court Upholds Adjudicator’s decision

Mumbai High Court has upheld the decisions of the Adjudicator of Maharashtra Mr Rajesh Agarwal in respect of two cases referred to it by ICICI Bank. The Bank had challenged the order of the Adjudicator and prayed for a stay which has been rejected by the Court.

News Report

Netizens in Karntaka hope Karnataka High Court and Adjudicator of Karnataka also become as much cyber law savvy as their counterparts in Mumbai.

Naavi


Android to be banned?

The proliferation of adult content on android apps has drawn the attention of the Government and serious thoughts are being given to the ways and means of controlling the menace.

One of the thoughts that is flying across is whether Android OS may be banned?. This of course ,may not happen since it would amount to closure of the mobile market itself. However Google may be required to enforce better control on the security aspects of the applications.

Related report

Naavi