RBI has been taken over by hawks

Posted on February 12, 2013 by Vijayashankar Na

RBI has traditionally been known as consumer friendly. Top executives of RBI have always upheld the interest of common man in devising their policies. This was seen through out the days when technology made inroads to Banking. The SR Mittal Group which gave its recommendations on Internet Banking, the G.Gopalakrishna Working Group which gave recommendations on E Banking security and the Damodaran Committee which gave recommendations on Customer service have all been very consumer oriented in their approach.

But.. But.. some thing has happenned now at RBI. There appears to be a shocking change of attitude. Now RBI is talking in the language of a blood thirsty shylok..

For confirmation, look at the language used in the discussion paper on “Disincentivisation of cheques”. It is full of words such as ‘Disincentivise”, “Charge”,”levy a Steep charge”, “levy a High charge”, “Create inconvenience” etc

Whatever may be the intention, the language used in the paper indicates that RBI has changed. I hope this is a temporary aberration and wiser counsels will prevail.

The discussion paper is worth being withdrawn and RBI should apologize to Indian Public for having released such an anti consumer literature.

Naavi

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Why RBI is wrong

Posted on February 12, 2013 by Vijayashankar Na

The RBI discussion paper on disincentivisation of the use of cheques is very disturbing. The objective of the discussion paper is to get public response on the points raised in the discussion paper or rather get a public endorsement on the suggestions contained there in.

The objective of the proposed changes is to promote the use of E-Banking in preference to the traditional banking channels which use cheques and cash. In the process RBI has suggested several “Anti Consumer Measures”.

A sample of statements made in the discussion paper are as follows.

1.The charges levied by banks beyond this number (minimum number of cheque leaves) may range from moderate to steep

2.In case card holders make payments of card dues using cheques, then high convenience charge may be levied.

3. For any cheques issued beyond the stipulated limit, charges may be levied at the time of payment / debit to the account by the paying bank when the cheque is presented for payment through clearing.

4. In case of individuals who have invested in shares/debentures/bonds etc. and have not opted for receiving dividend/interest directly into their bank accounts, we may consider levying a processing charge when the cheque is deposited into their bank account for collection

5. Cash withdrawals and deposits of cash by individuals may also be charged

6. Discourage cheque collection boxes at public places – have it only at bank branches. This will reduce the convenience of using cheques by individuals

The suggestions indicate a sadistic tendency of RBI and very very depressing.

Naavi

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RBI is recommending unreasonable and Usurious charges for customers

Posted on February 11, 2013 by Vijayashankar Na

I draw the attention of the Governor of RBI  to the latest discussion paper released by RBI for disincentivising the use of cheques.

If we go through some of the suggestions it appears that RBI has simply gone crazy. It is planning to misuse its respect and statutory powers to regulate the Banks to swindle the customers.

The suggestions in the discussion paper seems to have been issued either by a commercial bank or under the influence of a commercial bank.

The discussion paper for example suggests “Corporates should be asked to charge Rs 25 per instrument when they issue dividend warrants. It then goes on to suggest that collecting bankers should also charge for the collection”.

It appears that RBI has forgotten its objectives. It was considered the custodian of the Usurious Act to prevent charging of unfair interest to citizens. Now RBI itself has turned out to be crazily usurious.

I request  the Supreme Court to take notice of this development and ensure that Bank customers of India are protected from the mindless suggestions in the discussion paper.

A copy of the discussion paper is available here 

Naavi

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RBI out to openly violate laws of banking

Posted on February 11, 2013 by Vijayashankar Na

Section 5(b) of the Banking regulation act of India defines “Banking” as follows:

“banking” means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise;

It is inherent in the definition that ability for “withdrawal by means of cheques” is an integral part of the definition. If this is not there, a business cannot be called “Banking business”. If any Bank therefore takes a principled stand that it does not want its customers to use cheques then it means that it is withdrawing from Banking business.

The license granted to such a Bank should therefore be considered as invalid.

Now RBI which is the licensing authority and the Banking regulator in India is itself taking a principled stand that Banks should stop allowing withdrawal of funds by cheques and is not indicating that the banking license would be cancelled.

This policy is contained in the “Discussion paper on disncentivisation in the use of cheques” released by RBI in which several suggestions are being made on how to disincentivise the use of cheques.

The discussion paper is akin to a paper on “How to create a Bomb and destroy India” issued by the Parliament itself.

RBI has no legal right to talk of any plan to “Disincentivise” use of cheques since this hits at the root of the Banking definition.

I demand that RBI should immediately withdraw the discussion paper and stop talking of “Disincentivisation of Cheque” any time in the future.

I request the Finance Minister to take suitable action to ensure that the suggestions are immediately withdrawn.

Naavi

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Phishing Frauds and Customer Liability

Posted on February 11, 2013 by Vijayashankar Na

Here is an interesting paper about how in US and EU, losses arising out of password thefts such as Phishing are not borne by the customers. RBI needs to take special note of this.

In particular I would like to draw attention to the following part of the paper.

QUOTE:

“In the US, Regulation E of the Federal Reserve limits consumer liability, in the event of fraud, to $50 (this is separate from the $50 limit for credit-card fraud, Regulation CC) and covers any electronic transfer that is initiated through an electronic terminal, telephone, computer or magnetic tape.”

In the US banks, brokerages, and credit unions are governed by this regulation and most go beyond it and o ffer a zero liability policy to consumers. Bank of America,for example,guarantees zero liability for any unauthorized activity originating from Online Banking or Bill Pay.” Wells Fargo says “We guarantee that you will be covered for 100 percent of funds removed from your Wells Fargo accounts in the unlikely event that someone you haven’t authorized removes those funds through our Online Services.” Fidelity “will reimburse your Fidelityaccount for any losses due to unauthorized activity” and “under HSBC’s $0 Liability, Online Guarantee, you’re covered 100% and liable for $0.”

Even non-traditional financial institutions off er this guarantee. For example in its Dec. 2009 10-K fi ling eBay states: “PayPal currently voluntarily reimburses consumers for all financial losses from transactions not authorized by the consumer, not just losses above $50.”

Thus, in the US, individual consumers are largely insulated from the direct fi nancial consequences of credential theft” .

UNQUOTE

It is time RBI takes note of these and introduces similar policies in India also.

Naavi

Posted in Bank, Cyber Crime, Cyber Law, Information Assurance | Leave a comment

Internet Censorship-Case In Kerala posted for hearing

Posted on February 11, 2013 by Vijayashankar Na

The public interest litigation on Internet censorship filed in Kerala High court by an advocate Shojan Jacob is expected to be heard in the Keral High Court shortly. The petition which has highlighted the Section 79 rules under which arbitrary take down notices were being issued by private citizens and honoured by intermediaries also attracted the attention of the music industry which has impleded itself into the suit. details

Naavi

Posted in Cyber Law, ITA 2008, Uncategorized | Leave a comment