Naavi.org

One of the issues bothering ordinary citizens is the fact that Enforcement Directorate has been seizing a lot of new currency notes in many raids even while there is a shortage in the Banks.

So far, the suspicion was only on bank managers and we are aware that both in Delhi as well as in Bangalore several branch managers have been questioned and a few perhaps have been also arrested. The rumour that RBI may cancel the license of Axis Bank also emanated from the reports that several branches of Axis Bank were involved in systematic conversion of old notes to new notes in a fraudulent manner.

Now a report has emerged in social media in Bangalore that RBI may also be directly involved in the exchange of currency at least in one instance in Bangalore.

The whistle blower’s report is specific and it has been forwarded to the PMO. I hope there will be immediate action in this regard.

If this incident has happened in Bangalore, then RBI will not have any moral right to take action against either Axis Bank or any other Bank for the malpractices. Also similar incidents should have happened in many other RBI offices.

It is very sad that these institutions which we need to respect are themselves untrust worthy.

I have already requested the PM to announce a whistleblower policy in this regard and if Mr Modi himself makes a request and provides a channel of communication, then many bank employees both in commercial banks as well as RBI will turn into whistle blowers and we can unearth the huge amount of new currency that is being diverted to the black money holding people, most of whom are the politicians who are crying for the blood of Mr Modi.

If Mr Modi does not take immediate action, these fraudsters who are well connected will drag on this conversion until the end of 5o days limit which Mr Modi has asked to set things right and ensure that the situation will not improve.

Then the budget session of Parliament will also be a wash out with a demand for resignation of Mr Modi.

Waiting to see how this incident is handled by the PMO.

Naavi

After the earlier post in which I had indicated the unusual interest on the topic “Axis Bank” ,”License Cancelled”, one of my friends sent me a news paper report in a vernacular paper in Mumbai reproduced below.

It appears that the number of note exchange frauds reported from Axis Bank is what has triggered this report. However it appears that this is a speculation and is not true.

The article of 2013 was written in the context of the security vulnerabilities . In fact we have written many articles here criticizing Axis Bank for their deficiency in security both in the ATM as well as the Core Banking system. We have also pointed out the unfair attitude of the Bank in handling the customer’s complaints.

However, the current controversy is in the matter of exchange of new notes to favoured parties and assisting in the “Conversion” of demonetized currency. This is more a corruption of the individual Bank managers in different branches. We can fault the Bank for not building a culture of protecting the national interests. But the penalties have to be on individual staff of the branch and probably their regional heads.

In the current situation, it would not be wise for the RBI to take any action to cancel license of Axis Bank and the news report is only a journalistic over reach. However, penalties may be imposed on the Bank for the malpractices in the branch and the penalties may be heavy.

Before RBI moves in, it is the responsibility of the Bank management to take its own action against the erring branches and suspending the branch managers suspected to have committed such frauds.

I hope if the Bank takes sufficient action internally, RBI would be happy.

For the time being therefore let us kill the rumour about cancellation of license of Axis Bank.

Naavi

Added: Both Axis Bank and RBI has clarified later in the day that there is no proposal to cancel the license of Axis Bank.

Since yesterday, a strange surge in interest has been seen in “Axis Bank” in the Netizen community particularly connected to fraud and ATMs and surprisingly on “Cancellation of license”. This was observed by a large number of visitors to Naavi.org particularly to one article published in 2013. This is intriguing and indicates that there is an expectation somewhere that public are expecting some serious penal action by RBI on Axis Bank. I have no clue on the same and just reflect the reading of the data received.

On June 15 2013, we had published an article titled “Axis Bank ATM license should be cancelled by RBI” . In this article, we had highlighted frequent ATM frauds occurring in Axis Bank and had commented

“there is a clear indication that Axis Bank has failed to maintain a reasonable level of security at its ATMs which has caused the losses. It is therefore time for RBI to revisit its ATM security instructions and if it is found that Axis Bank has been systematically neglecting the security at its ATMs, RBI should consider suspending or cancelling the ATM licenses of Axis Bank”

In the last two days there have been nearly 400 visits to the particular page of this article some of the visits being directly out of a Google research “Axis Bank+license+cancel” indicating that there is some specific query on these terms. What is also surprising is that some of these Google queries has come from abroad like USA but most queries has come from India.

This is an unprecedented event and I expect some specific information in the air.

Let’s wait and watch.

Naavi

[This is in continuation of the previous article 0n the subject]

The article which appeared in Economic Times today credited to Ms Namita Wahi tries to put in a legal argument that the recent demonetization of the notes announced on November 8, 2016 was not constitutionally valid. Since there is a PIL being considered by Supreme Court at present, the article could be treated as an attempt to influence the decision of the Court and hence needs to be countered.

In my opinion, the Court need not have even admitted the petition since the admission is a needless intervention into the executive functions of the Government. Additionally, some comments said to have been made by the members of the bench during the preliminary hearings were critical of the Government  indicating an under current of hostility which could have been avoided.

Now the emergence of articles such as what Ms Namita Wahi has authored only adds a voice to the politicians opposing the move for their own selfish reasons and an excuse to the Judiciary to scrap the demonetization move.

In the article, the author has raised the issue of “Power of the Government under Section 26(2) of RBI Act, the constitutional right to property under Article 300A and earlier Supreme Court decision in Jayantilal Vs RBI after 1978 demonetization.

Under Article 300A “No person shall be deprived of his property save by the authority of law”. According to the author, old currency formed part of the “Property” and a mere executive order by the Government/RBI cannot be considered as “due process of law”. Accordingly, the author objects to there being no “Ordinance” or a “Bill passed as an Act of the Parliament” before the demonetization was announced.

In parts of the article, the author is either confused herself or is trying to mislead the public by using the term “restricting fundamental right”.

Property is now no longer considered a “Fundamental Right” and hence no argument can be sustained on “Reasonable Restriction”.

Another objection raised is that the notification is discriminatory between holders of bank account and non holders of bank accounts.  This is perhaps for the fact that holders of bank accounts could exchange upto Rs 10000/- twice a week where as others were allowed exchange of Rs 4000/- only. In my opinion this was an operational guideline and did not affect the legal rights of the holder. Asking for the identity of the person before an exchange is made is only logical and in the context of possibility of money laundering by the black money holders was a necessary precaution. Considering bank account holders as identified persons was therefore a reasonable ground for providing a higher exchange to them.

All the temporary measures such as restrictions on withdrawals did not extinguish any rights of the holder since he can exchange the currency anytime upto March 2017 under various means.

The problems that the daily wage earners etc are facing is a creation by their masters who are refusing to pay them through alternate means and the Government cannot be faulted for this.

Now coming back to the “Right to Property”, I think we need to consider “Currency” as a “Guaranteed obligation” and not as a “Property per-se”. It is an “Actionable Claim” against RBI Governor and has to be treated as such.

The argument of “Compulsory Acquisition of property without due process”  does not arise because firstly currency is not property and secondly there is no compulsory acquisition.

If any person is in possession of the demonetized currency, they have been given avenues to surrender them into their Bank account upto December 31, 2016 or to RBI upto March 2017 and their entire holding is available for them to withdraw. If however they cannot explain their source of income etc, it is a matter outside demonetization and has to be settled with the tax authorities. The scheme of payment of extra tax to regularize the deposit is an alternative which the account holder can opt at his own volition.

As regards the comment that “insofar as the government failed to ensure that 100% of the population had bank accounts prior to the issuance of this surprise notification, the classification may be assailed as arbitrary and violative of the right to equality under Article 14.”,  it is necessary to state that once every bank was authorized to open “Zero Balance” accounts, there was no restriction on any person opening a bank account. If any person has not so far opened an account, there is time upto December 31, 2016 to still open the account and deposit the old currency holding.  Hence the contention of the author is arbitrary and malicious.

It is important to realize that it is the fundamental duty of a citizen of this country to support an executive action which all of us know has throttled the fake currency holdings, the Naxalites, the Terrorists and the Pakistani currency suppliers besides the Indian black money holders. This obligation applies not only to ordinary citizens but also to the intellectuals like Ms Namita Wahi as well as the members of the judiciary.

Some other commentators are arguing that an amount of Rs 11.5 lakh crores was expected as black money in circulation and since most of it appear to have been deposited in the Banks, the Government may have failed in its objective. But we must remember that firstly the estimation of 11.5 lakhs may be wrong and may not include the currency supplied by Pakistan and what was hoarded by some individuals and kept out of circulation.

The hardships that people are facing today are the result of the handiwork of corrupt Bankers and Politicians who have diverted the supplies of new currency and has to be handled separately.

The need for confidentiality and the delay in calibrating ATMs are understandble and cannot be justification for questioning the demonetization issue.

Similarly the need for cyber security being strengthened, digital payment systems to be made free, introduction of cyber insurance, RBI circular of Aug 11 to be expedited are all desirable and we can rap the Government  for inaction in not doing enough in this regard. But again this is no reason to fault the decision of demonetization.

The possible economic slow down is a conjecture and there is no basis for even Dr Man Mohan Singh to arrive at a reliable estimate. The very fact that all politicians are opposing the move vindicates the Government that they have really caught the opposition napping and driven them crazy. Some of them are colluding with organizations and media and trying to mislead the public and possibly give some material for the Judiciary to take an adverse view of the demonetization decision.

The Supreme Court however must realize that they donot have a realistic option of putting the clock back however much they may wish. If they do, the respect that judiciary have today will take a big dent since the people will see it as an attempt to protect the black money within the system.

Alternatively, the Supreme Court, may consider demanding an immunity for the Judicial community from being questioned on “Unexplained Income” by  tax authorities declaring any such move as “Contempt of Court”. This can be justified as preventing undue pressure being put by tax authorities on the members of judiciary. Probably Government also may consider such a proposal acceptable for strategic reasons to maintain the harmonious relationship with the judiciary.

I will not be surprised if this prediction comes true.

Naavi

This article is a response to the article today in Economic Times by one Ms Namita Wahi, of the Center of Policy Research.

The article appears to be an attempt to influence the Supreme Court which is hearing the PIL and is known to be hostile to the current Government dispensation due to the ongoing controversy on Judicial appointments. It has to be therefore flagged as an unethical act of journalism on the part of both the author and the publication.

I therefore record my strong objection to the article and its intentions.

It is well known that corruption is not unknown in Judiciary. In fact many ex-Supreme Court Justices have vouched in the past brought out the unsavory play of corruption even at the Supreme Court level. It was during the days of Indira Gandhi that Supreme Court was compromised with the superseding of judges to protect the emergency and the stigma has not been completely removed till date. Even now there have been recent incidents that have raised eye brows.

For example, when a High Court judge opts to mis-total an arithmetic table and releases an influential Chief Minster from jail and the Supreme Court allows the appeal to linger on for 6 months (to let the convicted die peacefully outside the jail and the supporters of the convicted canvas for a “Bharat Ratna” award),  the citizens of India do get a signal that atleast some of the so called “Black Money” may be in the hands of past and present judicial members including those working in the respected highest court of the land. In this context, there could be some in the Judiciary who may be itching to at least make provocative comments against the Government to gain some brownie points with the similarly minded press. There may also be sufficient urge  to pass orders couched in the language of “Freedom of Expression”, “Protection of Fundamental Rights” etc to over turn normal executive orders instead of helping the executive to correct its mistakes if any and achieve objectives that are beneficial to the country. We are aware how the scrapping of Section 66A was influenced by media campaign which was gladly lapped up by the Supreme Court and converted into an erudite judgement on Freedom of Speech though it was a completely misplaced interpretation.

We therefore need to ensure that articles such as that of Ms Namita Wahi in leading publications such as Economic Times are not used as tools by the corrupt politicians led by equally corrupt politician advocates to give an excuse to the Judiciary to intervene in the de-monetization issue.

I donot believe that the Supreme Court would be naive enough not to see the upheaval that may be caused in the country if it decides to intervene and over turn the demonetization decision since it has a lot to cover for charges of its own corruption and nepotism in the Judicial appointments. It may however make some adverse comments just to feel that it has done its bit to embarrass the Government.

On the other hand, I urge the Supreme Court and the intelligentia to help the Government tide over the practical difficulties involved in the implementation of the demonetization scheme. People who have been involved in the illegal note exchange scheme both in the Banking system and elsewhere need to be identified and punished along with their political masters who are the root cause for the shortage of currency we see in the general market today.

I have already suggested some measures both to ensure that the obstructive measures of the opposition parties are thwarted as well as to improve the security of digital payment system and protect the interest of the public.

 I would greatly appreciate the Supreme Court if it chastises the Government for

a) not introducing a whistle blower scheme to make public bring any illegal note exchange activities in the Bank or elsewhere to the knowledge of the Government authorities in such a manner that even the Tax authorities are not selective in taking corrective action

b) not providing more incentives for digital payments including complete abolition of “Service Tax” on all digital payments ..even beyond Rs 2000/-

c) not ensuring that the RBI’s limited liability circular of August 11, 2016 is operationalized

d) not introducing a Cyber Insurance Scheme for the public

If the Supreme Court bench hearing the case can push the Government to take such actions expeditiously, the public in India will continue to respect the Judiciary. Otherwise, there is a danger that public will get disheartened that corruption is too deep routed to be disturbed even by Mr Modi.

Naavi

(P.S: More on the legal issues involved addressed in the follow up article)

In discussions on “Privacy” we often debate how can the service provider use my data for purposes which are commercially beneficial to him but I am neither aware nor benefiting from such usage.

The general principle of all Privacy legislations is that the “Data shall not be used nor disclosed by the processor except as authorized by the data owner or otherwise provided under law”. Data owner often signs a contract with the data collector in which the data collector discloses his privacy policy detailing why he is collecting the information, what he will do with it etc. Once this contract is accepted by the data owner by say “Clicking on the I accept button”, it is deemed to be a consent and it will determine all further rights and liabilities.

In India “Click Wrap” contract through an “I Accept button” is not recognized in law and hence all such consents only become “Deemed consent” which is “Voidable” at the option of the customer at least as to some fine print clauses of the standard contract.

Under these circumstances, if the data user had over stepped the consent terms and used the data for commercial exploitation, the data owner normally could only grumble without a proper legal remedy.

It appears that now there is a new door being opened in the Privacy legislation in India applicable to “Health information” which is also a “Sensitive Personal Information” under ITA 2008.

The recently amended EHR guidelines released by the Ministry of Health and Family Welfare which is a pre-cursor to the Health Care Data Privacy and Security Act make a categorical statement that

1. The contained data which are the sensitive personal data of the patient is owned by the patient.
2. The medium of storage or transmission of such electronic medical record will be owned by the healthcare provider.
3. The physical or electronic records, which are generated by the healthcare provider, are held in trust by them on behalf of the patient

This provision actually lends substantial strength to the “Consent” by not only making it a part of a Contract under the Indian Contracts Act but also introduces the element of possibility of “Breach of Trust” if the data user uses the data other than as provided for in the consent.

Though the EHR does recognize the national interests in denying some privacy rights (which we shall discuss in a subsequent article), the use of the term “Data is owned by the patient” makes a strong case for legal interpretation of “Data” as “Property” and all the rights associated with it including the right of the data owner to place a price on it. If the data user makes any substantial profit out of aggregation of individual data, it would therefore be reasonable to expect that part of the commercial benefit arising thereof should go to the data owner.

This concept though laid out specifically in the case of health data, should be extendable to all types of data including financial data.

It would require some time for understanding the full implications of this concept in the era of data analytics and data aggregation over IoT devices and a multitude of platforms.

Naavi