Banking News Dated 22 September 2017

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Banking News: September 22, 2017

Financial inclusion providing the entire range of banking services: Arundhati Bhattacharya

Financial inclusion providing the entire range
of banking services: Arundhati Bhattacharya

The Press Trust of India
Published on September 21, 2017

India has taken a series of steps to ensure the common man has access to financial services, SBI chairman Arundhati Bhattacharya said as she called for collaboration among the government, the banking system and the technology providers to make it successful.

New York, September 21 (PTI):  India has taken a series of steps to ensure the common man has access to financial services, SBI chairman Arundhati Bhattacharya said as she called for collaboration among the government, the banking system and the technology providers to make it successful.

“Financial inclusion as we see it today is not only providing the entire range of banking services, but also insuring that we provide opportunities for investment, insurance and pension products to every single Indian, no matter how small or how remote,” Bhattacharya said in her address at the Bloomberg Global Business Forum yesterday.

Financial inclusion she said has four key aspects— accessibility, affordability, quality and usability. Giving a brief picture of the activities in India towards financial inclusion, she cited the example of the Unified Payment Interface for seamlessness of payments between various organisations.

Bhattacharya said the presence of these platforms has actually reduced the cost of transactions to probably the lowest anywhere in the world. “This is the way that we have gone ahead with financial inclusion hoping thereby to empower the population to have the benefit of the financial system, in order to scale whatever they are doing. However, there is one thing that is a major challenge. And that one thing is, in the initial stages, such accounts are really not commercially viable, she said.

As a result, Bhattacharya said, “If this really had to have traction and be successful in any country, there has to be collaboration.”

“Collaboration amongst the government, the banking system and the technology providers,” she said.

“It becomes extremely difficult if the banking system is privately owned, because privately owned banks, even though they may feel that this is the right way to go, they don’t have the ability to do so, because quarter and quarter they have to report results,” Bhattacharya said.

Noting that in the initial phases, the amount that one has to invest in such accounts is not going to show quarterly results, she said therefore, there needs to be a rethinking from the point of view of investors as to what they are going to give a premium on and what they’re going to discount.

“Very often, and because we are owned 57 per cent by the government, we are told very frequently that there is a discount, on account of the fact they know we have to carry out certain government mandates, such as these programmes,” she said.

“I think it’s high time that society at large realise that if you’re going to have a stable society, if you are going to have a sustainable growth, then this is the way to go. And therefore, any organisations that are part of such things should actually be given a premium, and not a discount,” Bhattacharya argued.

Bank credit growth unlikely to pick up
during festival season, says SBI report

The Press Trust of India
Published on September 21, 2017

New Delhi, September 21 (PTI): Credit growth is unlikely to pick up during the festival season, though improvement is expected in September industrial growth numbers due to restocking by the automobile industry, an SBI report said on Thursday.

The yearly SBI Composite Index for September 2017 is at 22-month high of 53.6 (moderate growth) compared to last month's index of 50.9 (low growth), said the SBI Ecowrap report.

The monthly index also jumped to one and half year high of 54.2 (moderate growth) in September, compared 49.9 (low decline) in August.

The SBI Composite Index, an indicator of manufacturing activity in the economy, aims to foresee the periods of contraction and expansion.

“The good news is that based on the SBI Composite Index, we believe that the industrial growth (IIP new series) may grow at the highest rate in September," the report said.

The possible traction in September growth rate is because of evidence of restocking in automobiles. The discounts offered by vehicle dealers possibly enabled them to clear stock and facilitate restocking post GST, it said.

The bad news is that there is hardly any difference in credit growth in festive and post-festive months, if "we look at system wise credit data", the report said.

This means that the current 6.5 percent pre-festive credit growth may well be the norm in coming months.

"This is contrary to current market perceptions that there could be a pick up in credit growth in festive months," the report said.

It further said the infrastructure sector has been marred by persistent policy logjams, particularly those associated with delayed clearances on the part of the government, aggressive bidding by private developers during the high growth phase and inadequate appraisal mechanisms by financiers, all bringing the infrastructure sector "growth to a standstill".

Even as the government is “contemplating a comprehensive package", the project-wise data indicate that currently there are 354 unresolved projects worth Rs 18.1 lakh crore, it said.

State-wise analysis suggests that five states (excluding others and multi-state) account for 52 percent of total projects under consideration. The list is topped by Odisha, followed by Maharashtra and Jharkhand.

In row with banks, IRCTC disallows a number of lenders to use its payment gateway for debit cards

Shritama Bose
The Financial Express
Published on September 22, 2017

Post-demonetisation, IRCTC had waived the convenience fee of Rs 20 it was charging customers. “Every day we are losing 50,000 transactions,” a senior executive with State Bank of India (SBI) said on condition of anonymity.

Mumbai, September 21:  A squabble between banks and Indian Railway Catering and Tourism Corporation (IRCTC) over fees has resulted in the latter disallowing a number of lenders from using its payment gateway for debit cards.

Bankers FE spoke to explained that IRCTC had stopped them from operating on the website because they were unwilling to share a portion of the convenience fees earned on customer transactions.

An email sent to IRCTC requesting a comment remained unanswered.

The Indian Railways subsidiary’s website is among the most busy portals in the country. Currently, the IRCTC website allows card-based payments only for cardholders of Indian Overseas Bank, Canara Bank, United Bank of India, Indian Bank, Central Bank of India, HDFC Bank and Axis Bank.

Earlier this year, IRCTC had asked banks to share with it half the convenience fee that lenders recover from card transactions on the website. The Indian Banks’ Association (IBA) is understood to have been discussing the issue with IRCTC and the Indian Railways with a view to resolving the matter.

Post-demonetisation, IRCTC had waived the convenience fee of Rs 20 it was charging customers. “Every day we are losing 50,000 transactions,” a senior executive with State Bank of India (SBI) said on condition of anonymity.

“Normally, the merchant pays the acquiring bank. But, since IRCTC does not pay us, we were recovering our costs from customers and that is how it had been all these years.”

Merchants who use the services of a bank for accepting card-based payments typically pay the bank a charge, referred to as the merchant discount rate (MDR). Banks that have refused to comply with IRCTC’s demand say they are doing so because it violates the principles of the merchant-acquiring business..

Currently, banks are allowed to charge an MDR no higher than 0.25% on transactions of up to Rs 1,000 and a maximum of 0.5% on transactions of values between Rs 1,000 and Rs 2,000. Bigger transactions attract an MDR of 1%.

These rates are based on temporary guidelines issued by the Reserve Bank of India (RBI) during demonetisation and extended thereafter. As per the draft guidelines for rationalisation of MDR put out by the RBI on February 16, railway ticketing and passenger service transactions would attract a flat fee of Rs 5 for transaction values between Re 1 and Rs 1,000 and Rs 10 for transaction values between Rs 1,001 and Rs 2,000. Transactions of higher value would be charged a maximum MDR of 0.5%, with a cap of Rs 250 per transaction. Ticket buyers can, however, pay for their bookings using mobile wallets which, as of now, do not charge the consumer or the merchant for transactions.

Indian economy in a tailspin: What went wrong

Asit Ranjan Mishra & Gireesh Chandra Prasad
The Mint
Published on September 22, 2017

While investment demand was anyway weak when the NDA came to power in 2014, private consumption has also started decelerating due to demonetisation

New Delhi, September 21: The National Democratic Alliance (NDA) won a landslide in the 2014 general election with the promise of fast-tracking economic growth and creating jobs. It replaced the Congress-led United Progressive Alliance (UPA) government that was mired in corruption scandals and had mismanaged the economy. Three years on, it is the economy again that is proving to be the Achilles’ heel for the Narendra Modi government.

Sample this: Economic growth decelerated to a three-year low of 5.7% in the June quarter of 2017-18. The current account deficit (CAD) hit a four-year high in the same quarter at 2.4% of gross domestic product (GDP) despite benign oil prices that have cushioned government finances. While investment demand was anyway weak when the NDA assumed office, private consumption has also started decelerating, impacted by the government’s demonetisation drive.

Exports have picked up recently, but they are no longer the economic drivers they once were and exporters have been hit hard by a rising rupee. The goods and services tax (GST), which unified India into a single market, has added to the woes because of complex tax filing procedures.

Over the past weeks, news of the economy has dominated the headlines. The government went into a huddle and on Wednesday, finance minister Arun Jaitley said the government is working on a stimulus package to revive the economy.

What went wrong?

Pronab Sen, former chief statistician of India and someone who has worked in the government for the last 25 years, said the problem started with the reversal of rural growth, which remained high during the 2004-2012 period, propelling overall economic growth. “While farm output was growing at 3%, farm income was increasing by 7.5%. Income of the poorest was growing rapidly (and) that drove growth as well as inflation,” he said.

The problem began in 2013-14 when things started to reverse. Global food prices came down while the Reserve Bank of India (RBI) still maintained a restrictive monetary policy. Growth in the minimum support price (MSP) of selected farm products slowed dramatically to 3.5% per year from an average of around 8% earlier.

After 2014, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which assures 100 days of manual work a year to at least one member of every village household, became resource-driven rather than demand-driven.

Less focus on MGNREGS, especially during the two consecutive droughts years of 2014-15 and 2015-16, aggravated the rural demand situation and dampened rural growth. While growth was slowing, two back-to-back structural changes, the withdrawal of high-value banknotes and implementation of GST gave a body blow to the unorganised and organized sectors respectively.

With the government overnight withdrawing 86% worth of currency in circulation (by value) on 8 November, the cash-dependent unorganised sector that makes up 40% of India’s GDP came to a standstill with anecdotal evidence showing farmers being forced to dump their produce for want of buyers and small businesses laying off employees.

The implementation of GST barely eight months after the note ban further unsettled the supply networks with dealers reducing stocks and companies drastically cutting production, leading to the three-year low GDP print of 5.7% in the June quarter.

Technical glitches in filing GST returns and huge delays in refund of input tax credit for exporters have further dampened business sentiment.

Sen says that if concerns surrounding refund of input tax credit are not quickly resolved, there will be a huge spurt in demand for working capital by companies which banks won’t be able to handle. “So far we have a demand-side problem. If a supply-side problem is added to it, it will further bring down our GDP for next two quarters,” he said.

While the Modi government inherited many of the current problems, including the mounting non-performing assets (NPAs) of public sector banks, Sen said it has to be faulted for not diagnosing the problems properly and adding to the woes through demonetization and flawed implementation of GST.

The share of working capital loans in total lending has fallen from 76% in 2002 to 48% at present; lending for housing and fixed capital rose from 24% of total lending to 52% without a resolution mechanism such as the current insolvency and bankruptcy law in place. Sen says such a law should have been in place seven-eight years ago and blames the UPA for the mess in the banking system.

NPAs, or bad loans, in state-owned banks touched Rs6.41 trillion by 31 March 2017 from Rs1.56 trillion on 31 March 2013. This excludes restructured loans.

Sen said restrictions on cattle trading have further aggravated the situation in the rural economy. “Animals act as an insurance at time of crisis in rural India as they can be easily sold for meeting daily needs. The restrictions on selling cattle is one of the reasons growth in animal husbandry came down in the June quarter of 2017-18, thus affecting agricultural growth,” he added.

What now?

It will be an uphill task to come out of the economic trough at a time private investment as a driver of economic growth is missing and government spending has been the sole driving force for the economy. “Monetary policy-based solutions are not going to work in such a situation as banks are not going to increase lending substantially in the current scenario. Only an aggressive fiscal push with a dedicated timeline can take the economy out of the current slowdown,” Sen said.

“Think small, not big and begin now” is the one line prescription by Sen. “No bullet trains, no eight-lane highways. Focus on rural housing, rural roads, minor irrigation projects where results can be delivered quickly,” he said.

Sen said that to boost spending on infrastructure, the fiscal deficit can be allowed to slip to 3.5% of GDP from 3.2% budgeted for 2017-18 and then to 4% of GDP for next two years after which it can be gradually brought down.

“In a crisis scenario like the present one, homeopathic solutions will not work. The economy needs steroids,” Sen said.

In ATM’s 50th year, recalling
its growth — and peak — in India

Shaji Vikraman
The Indian Express
Published on September 22, 2017

In the early part of the last decade, private banks that were licensed in 1994 started to expand their networks, giving a big push to ATMs

Mumbai, September 22:  In the mid 1990s, with the opening up of the banking sector and entry of private banks, India’s central bank discussed the issue of customer service. Given the power of the unions, most bankers remained cold to suggestions to extend banking hours, and offer services on holidays. That was when policymakers thought of encouraging the installation, in a big way, of Automatic Teller Machines or ATMs to make it easier for customers.

Not surprisingly, considering the technology and cost involved, the early push came from foreign banks. ATMs — also automated teller machines, cash machines, or cashpoints — had first been seen in England in 1967, courtesy Barclays Bank. In India, Hong Kong and Shanghai Bank was to pioneer the machine a couple of decades later, in the late 80s — and other foreign banks followed suit.

Initially, ATM services were restricted to preferred customers — the high net worth and wealthier individuals. But around the turn of the century, Citibank launched its Suvidha programme, when a cluster of ATMs in Bangalore began to offer services to not just the privileged, but to all customers.

Expanding the ATM network helped foreign banks get around limitations imposed by the cap on the number of branches that could be approved annually — then 20, in line with the WTO agreement on services. In the first stage, banks that put up ATMs restricted their use to their own customers. A little later, some banks joined hands to run the machines and expand these services. In that phase, with its teething problems, the regulator addressed concerns relating to safety and security, especially at “offsite” ATMs, which were not attached to branches of banks.

In the early part of the last decade, private banks that were licensed in 1994 started to expand their networks, giving a big push to ATMs. Some of these banks — HDFC Bank, UTI Bank (which later became Axis Bank), ICICI Bank and IDBI Bank — started to offer free ATM cards to all customers. At that stage, banks had to still obtain approvals from the regulator to get around the provisions of the Banking Regulation Act that specified activities that could be carried out from the premises of a bank. The regulator found a way by allowing for post facto approvals.

Private banks realised it was far cheaper and more efficient to focus on expanding the ATM network than to build brick-and-mortar branches. Less cash could be kept in branches, staff costs could be cut, and cash could be given to customers at any time of the day or night. Internal calculations made by some banks over 15 years ago showed that the cost of dispensing cash through ATMs was a third or fourth of doing so at branches.

As state-owned banks, led by State Bank of India, joined the bandwagon, customers living away from the metros got access to ATMs. As the numbers swelled, some complaints came too — and the Reserve Bank of India found that charges varied from bank to bank. Governor Y V Reddy then set up a working group to formulate a scheme for ensuring reasonable charges, and to incorporate it in the Fair Practices Code. After completing its analysis, the RBI made all ATM transactions free, along the lines of the UK, Germany, France, among other countries.

Some bankers protested — saying there was a cost to offering this service. Reddy’s basic argument was that this was a public good: the cost incurred in delivering cash to customers — whether at a branch or through an ATM — did not matter because being granted a licence to accept public deposits was in itself a privilege, for which banks could well subsidise ATM services. He also delighted in pointing out that the ATM had, in a sense, democratised banking — with no special access for the privileged or the elite, the machines were the same for all customers.

Subsequently, however, the power to price these services returned to banks after the regulator eased its stance. But by then, the regional spread of ATMs had changed, as also the range of banking services they offered. From being just cash dispensing machines, they had started to offer payment and many other services, including for loan products, helping millions of customers reduce their visits to bank branches, especially in the cities. As the reach of banking has grown over the last decade, more banks, especially state-owned ones, have started installing more machines that can also accept cash — to support the lakhs of migrant workers who send money back to their families in the villages.

India now has over 2 lakh ATMs, with banking leader SBI alone accounting for over 43,000. But this growth is bound to reach some limits now. With the rising numbers of electronic transactions through debit and credit cards and PoS machines, the level of cash usage will decline, and the growth in ATMs should taper off. Globally, new generation Internet banks are changing the way the business is run — while India still retains plenty of scope for widening access to banking, the most important financial innovation of the past 20 years, as the former head of the US Federal Reserve Paul Volcker described it in the Wall Street Journal in 2009, may well have run its course.

Payments banks are feeling restricted,
worry about getting customers to transact

Beena Parmar
The Moneycontrol News
Published on September 22, 2017

With changing market scenarios, especially post demonetisation, payments banks are competing more with fintech players rather than commercial banks.

Mumbai, September 22: Payments banks say they are more like "restricted banks" as the challenge is to get customers to transact.

Sudhakar Ramasubramanium, Managing Director and Chief Executive Officer of the yet-to-be launched Aditya Birla Idea Payments Bank, said the issues with payments banks is that it is a daily wage labourer model but no annuity model.

"We do have the advantage of the customers as a telecom player but will those number of customers transact, that's the challenge. Our revenue pool is 10 percent of the overall banking revenues. It is more like a restricted banking licence...We consider ourselves a fintech player that can take payment but cannot lend," he said during a panel discussion on lessons learnt operations of payments and small finance banks.

At the same event, H Srikrishnan, CEO of yet-to-be launched Reliance Payments Bank said that demand is not a problem. "We are looking at a large market. Large banks today are looked at as vehicles of deposit taking institutions and not so much as the bank of transactions," he said.

He said their efforts would be towards transactions. "Though they may not be happy with their bank but all banks today offer IMPS, so there is stickiness with existing banks and hence taking time (to transact)," he said.

With changing market scenarios, especially post demonetisation, payments banks are competing more with fintech players rather than commercial banks.

Payments Banks are a set of differentiated new model of banks conceptualised by the Reserve Bank of India (RBI). These banks can accept a restricted deposit, which is currently limited to Rs 1 lakh per customer and facilitate payments and offer third party products, but cannot issue loans (which is core revenue for most banks) and credit cards.

Currently, most players are figuring out ways to generate a sustainable business model to ensure viability along with meeting the financial inclusion objective.

Of the 11 applicants that were granted the in-principle licence to set up payments bank, three including Tech Mahindra Ltd., Cholamandalam Distribution Services Ltd. and an individual applicant Dilip Shanghvi have withdrawn from the licence.

At present, Airtel, Fino and Paytm Payments banks are the three entities who have been officially launched and India Post Payments Bank has done a soft launch.

Government-owned India Post Payments Banks aims to provide the right infrastructure with its reach and trust among customers.

Currently, it is piloting with eight access points in Chhattisgarh and Jharkhand and plans to launch its financial services through all of 1.55 lakh post offices and 3 lakh employees across the country by March 2018.

AP Singh, CEO of India Post Payments Bank said: "Getting customers is easy but getting them to transact is difficult... At present, we have Rs 10,000 in our payments bank account."

All the players concluded that they would require to build scale of business before looking for profitability. They are looking at unconventional revenue streams including data monetisation, cross-selling of financial products, forming credit access platforms and creating alternate merchant payment models to get around the constraint of not being able to lend.

Under the operational guidelines announced in October last year, the RBI allowed payments banks to engage with group entities at an arm’s length basis to operate as business correspondents. They can also allow employees of the group entity to conduct banking activities, provided the payments bank remains responsible for all such activities.

Srikrishnan said reliability and same performance across all the technology platforms of an entity is critical. "We are a telco-cum-retail model," he said.

Jio Payments Bank Ltd., a 70:30 joint venture with Mukesh Ambani-owned Reliance Industries Ltd and the country's biggest lender State Bank of India, plans to launch its banking services along with JioPhone deliveries in October.

Is it really mandatory to link Aadhaar
 with bank account and mobile

Ramarko Sengupta
The Times of India
Published on September 22, 2017

v         The legality of Aadhaar is under cloud, says Supreme Court lawyer Apar Gupta
v         Even the Aadhaar-PAN issue will again be argued in November
v         By November legal clarity on whether Aadhaar is unconstitutional or not is expected to emerge

Mumbai, September 21: We have all been getting repeated reminders from mobile service providers and banks via text messages and other means that it is mandatory to link our phone numbers and bank accounts with the 12-digit unique identification number Aadhaar. Failing which, our bank accounts and mobile numbers will cease to exist, if the seeding is not done within the stipulated deadline-- December 31, 2017 for bank accounts and February 28, 2018 for mobile numbers.

While the government has indeed directed telecom companies and banks to get this done, is this really mandatory or even legal?

We spoke to Supreme Court lawyer Apar Gupta to understand the legalities around this.

For starters, before the deadline, banks and mobile service providers cannot disable your account or number, says Gupta. As far as the legality of the directive is concerned, he says "It's under a cloud and there are right now doubts that exist about the legality of the Aadhaar system."

The 'cloud' that Gupta mentions is formed from the landmark Supreme Court ruling in August which states that Indians enjoy a fundamental right to privacy, that it is intrinsic to life and liberty and thus comes under Article 21 of the Indian constitution.
"The right to privacy judgement got all of us very excited and there were questions which came up right after the judgement that what is its impact on Aadhaar. For this lawyers then went to the Supreme Court and said that you now have the right to privacy firmly established under the Constitution and now you need to apply it to the pending court cases which challenge the Aadhaar scheme.

Now, a lot of these court cases also challenge Aadhaar specifically being linked to a lot of government services which are now requiring it as a precondition for the service itself," says Gupta who had argued for petitioners in the Right to Privacy case and also represents those challenging Aadhaar.

These cases are due to be heard in November which is prior to the seeding deadlines, adds the lawyer who is a vocal critic of the Aadhaar scheme over concerns around security and privacy.

So, by November some legal clarity on whether Aadhaar is unconstitutional or if it's legal and justified is expected to emerge.

This in turn will obviously have a bearing on whether all of us indeed need to get our Aadhaar seeded with our bank accounts and mobile numbers.

"People who believe that Aadhaar opens them up to a large array of concerns including privacy, profiling and even identity theft they should hold on. But again this is a very personal call each person has to take after they asses where they stand on this issue and how they personally assess the level of impact it's going to cause them," says Gupta.

It would be interesting to look back at the Supreme Court's judgement in the Aadhaar- PAN linking case here (which was delivered a couple of months before the right to privacy verdict), where the top court stated that while the government was right in asking for Aadhaar to be linked with the 10-digit alpha-numeric PAN, it was too harsh a punishment to deactivate someone's PAN altogether. It results in the "civil death" of a person as they are not able to function effectively in society, the court had stated. Having your bank account and mobile number disabled would also similarly result in "civil death" opines Gupta.

The Aadhaar-PAN issue will again be argued in November as it came before the right to privacy judgement, Gupta says.

The government on its part wants to link almost all essential services to Aadhaar to plug leakages and gaps that exist within the system as India moves towards digitisation. The Centre seems to believe that Aadhaar could be that proverbial 'silver bullet' that takes down terrorism, money laundering, black marketeering and other frauds, all at once.

Every resident who has an Aadhaar has their biometrics (fingerprints, iris scan) linked to the 12-digit unique identity. According to the government, over 99 per cent of adults in India are enrolled in the program, with nearly 90 per cent of the entire population coming under its fold.

Data Theft in Organisations and Legal Issues

Prashant Mali
The Moneylife Online
Published on September 21, 2017

Data theft is defined in Section 43 (b) of the Information Technology Act, 2000 (IT Act) as follows: “If any person without permission of the owner or any other person who is in charge of a computer, computer system of computer network, downloads, copies or extracts any data, computer database or information from such computer, computer system or computer network. It is the term used when any information in the form of data is illegally copied or taken from a business or other individual without his knowledge or consent.”

In the era of information technology (IT), data is an important raw material for all businesses, including brick and mortar companies, business process outsourcing units, banking, media and IT companies. Data has become an important tool as well as a weapon for corporates to capture larger market share. Given its importance, data security has become a big concern for all businesses. Data theft and piracy are huge threats that are forcing companies to spend millions of rupees on data analytics. In many cases, the bottom-line of a business depends on the security of its data. A recent episode of the popular television series, Game of Thrones, had kindled a huge discussion on data theft. Let us look at some of the issues involved in data security

Mobility-related Issue: The problem with data theft is that it has no international borders. For example, a computer system may be accessed in the US, its data manipulated in China and the consequences of that action felt in India. The fact that cyber criminals can operate across different sovereignties, jurisdictions, laws and rules is an issue in itself. Collection of evidence, in such circumstances, is complex. It requires investigations to be conducted in three different countries which may not even be on talking terms with one another; poor technical know-how of our cops only adds to the woes. Lack of coordination between various investigating agencies and navigating the extradition process of various countries is another headache. The absence of specific laws to deal with the crime of data theft is, however, the biggest problem; it allows a culprit to get away by picking and choosing from various legal loopholes, even after being caught.

Our Data Protection Laws: Data theft has emerged as one of the major cyber crimes worldwide. India does not have specific laws to deal only with data protection, but we have the IT Act. Here are a few Sections of this Act that are significant.

Section 43 (b) of the IT Act provides protection against unauthorised downloading, copying, extracting information, data or a database, by imposing heavy civil compensation which could run into crores of rupees. Section 43 (c) provides for compensation in case of unauthorised introduction of computer viruses or other contaminants. Clause (i) provides compensation for destroying, deleting or altering any information residing on a computer or diminishing its value.

Data is an intangible asset whose value could run into millions of dollars, but Section 43 does not quantify the compensation to be paid. Hence, a complainant is dependent on the mercy of our courts and the intelligence of his lawyer.

Section 66 of the Act protects against data theft, while Section 72A deals with the punishment for disclosure of information in breach of a lawful contract. Both these Sections provide for a penalty that includes imprisonment of up to three years or fine of up to Rs5 lakh or both. In a recent judgement, Canara Bank Vs CS Shyam & Another, the Supreme Court (SC) held that service details of an employee also amount to ‘personal information’ and cannot be furnished even under the Right to Information Act.

Similarly, in another case, it was held that an employer couldn’t use, or ask for, bank statements of an ex-employee. These two cases are an indicator of the rights of individuals, even before the recent SC upheld right to privacy as a fundamental right. 

So, the next time you plan to copy or download data from the computers or network of your friends, clients, teachers or employers, please remember that your actions can put you behind bars for up to three years. And you could lose even more, if a compensation claim suit is also filed in a civil court. Corporates, as victims of data theft, have the option of filing both, a civil and criminal case, simultaneously with injunction remedies.

What can be done to revive India’s
sluggish economic growth? Here’s
what five economists prescribe

Mayank Jain, The Scroll Online
Published on September 21, 2017

Hike government spending, pour money into rural areas, cut
interest rates, refrain from disruptive moves like demonetisation

Mumbai, September 21:  India’s economic growth is slowing but can the government bring it back on track? This is what Finance Minister Arun Jaitley reportedly discussed with ministers and officials Tuesday evening. While a concrete plan to address the problem is apparently being developed with Prime Minister Narendra Modi’s blessing, a section of the industry and many economists have criticised the government for not being prudent enough to read the distress signs and for treating the slowdown as temporary and transient.

The economy grew by a mere 5.7% in the quarter ended June 2017, extending the streak of falling growth to the sixth consecutive quarter. This has seemingly forced the government to go try and figure out what went wrong, and how it can be fixed. Distress signals, though, had been flashing for a while: in the first quarter of this financial year, growth fell to 5.7% as against 7.9% in the same period last fiscal year.

All four contributors to economic growth – domestic consumption, foreign consumption or exports, private investment and government spending – are hit by the slowdown. In the first quarter of this fiscal year, domestic consumption fell to 6.66% as against 8.41% in the same period last fiscal; exports as a share of the Gross Domestic Product was down to 19% from 20%; and fixed capital formation decreased from about 31% of the GDP to 29.8%, signalling a slowdown in the industry as well.

As for reasons for this poor showing, Bharatiya Janata Party chief Amit Shah cited “technical reasons” while India’s Chief Statistician TCA Anant blamed destocking by industries in anticipation of the Goods and Services Tax.

Scroll.in spoke to some economists to get a sense of what the government can do to address concerns about the economy and spur growth. Here’s what they suggested.

Spend more and forget about ratings

“The government needs to give economy an immediate boost and fiscal spending is the way to go about it without worrying too much about the consequences because economic growth is in doldrums,” said Ajit Ranade, chief economist at the Aditya Birla Group. Although the government has already spent much of its budgeted expenditure, he argued, it needs to spend more to spur investment and demand in the economy to push up the growth numbers.

“The argument against fiscal spending is that it will be inflationary, ratings downgrade will happen, interest rates will go up, or debts could become unsustainable,” Ranade said, “but right now, the situation is very dire.”

“We need to do whatever it takes, at least in the short term,” he added. “We also need a weaker rupee; it [strong rupee] is hurting both the exports and the business. Imports are surging and they are eating into the domestic market share. We don’t need ratings, we need growth right now. Ratings are meaningless if you are not growing.”

Cut interest rates, provide financing and stable business environment

Radhika Pandey, a consultant for the National Institute of Public Finance and Policy, said the key reason behind the slowdown is weak private investment. So, a steep rate cut in the benchmark lending rates is required to allow for monetary policy expansion. In simpler terms, the Reserve Bank needs to cut interest rates for banks, thereby making borrowing cheaper for the industry and spurring investment.

“High real interest rates do not augur well for private investments,” Pandey said. “Given the limited transmission of monetary policy there needs to be a steep cut to have a bearing on private investments.”

The government should also enable non-banking sources of funding for businesses. One of these is offshore rupee denominated borrowing, whereby a firm can borrow money from international markets in the Indian currency, thereby lowering the risk of currency volatility.

Pandey also argued for more certainty in the business environment and said businesses can do without shocks like demonetisation. “After demonetisation shock, there is an environment of uncertainty in the economy,” she said. “This inhibits announcement of new projects by the private sector. There should be an environment of certainty that no such disruptive moves would rock the economy in the near term.”

Acknowledge the slowdown and spend on rural areas

“The economy is in collapse mode and the government needs to come out publicly and accept it first before trying to fix it,” said Himanshu, associate professor of economics, Jawaharlal Nehru University. “All major indicators point to a slowdown not seen in recent months, so there is something very structural about this and it can’t be solved immediately.”

Himanshu said the government needs to spend more on rural areas. Why? Increasing rural people’s incomes can drive up the consumption demand, which in turn will boost the industry. “The best thing will be to spend more money on areas where the demand has slumped to create more demand,” he said. “That would be in rural areas, construction sector and the unorganised sector.”

He said the government has enough money for this kind of spending. All it requires is political will. “The government should not worry too much about fiscal space, they can definitely manage the fiscal space and spend more,” he said. “Right now, one shouldn’t be worrying about fiscal situation when the economy is getting into a mess. Anything that creates more income in the rural areas can help India’s growth story. It’s not a rocket science.”

Economy can’t be fixed overnight, so don’t do shock therapy

Sunil Kumar Sinha, principal economist at the ratings agency India Ratings, warned that neither the private sector nor the government can quickly drive up economic growth in the short term. So, the government would do well to see through its reforms agenda without getting distracted by calls from people worried about the state of the economy.

“One needs to have patience to see to it that this process doesn’t get derailed, and more and more bad assets are resolved through reforms like the new bankruptcy law,” he said, adding that the government must adhere to its commitment to limit fiscal deficit to 3.2% of the GDP.

“The fiscal space is simply not available,” Sinha said. “Also, monetary space to really stimulate the economy is also very limited given that the RBI has reduced rates by 200 basis points since January 2015. I don’t see how we can make a difference in the short term to accelerate the growth. On the contrary, they need not be too perturbed by the low rate of growth and keep taking steps to make economy more resilient and avoid steps like demonetisation. We are realising that without demonetisation, the growth situation would have been much better.”

Don’t chase ratings

Soumya Kanti Ghosh, chief economic advisor to the State Bank of India, said India needs to stop chasing the “mirage of a ratings upgrade” and focus on spending more.

“We certainly believe that we are in a slowdown mode since Q2FY17 and any slowdown that has been prolonged till Q1FY18 is technically not short-term in nature or even transient,” Ghosh wrote in a note published on September 19. The government should continuously spend more without worrying much about fiscal deficit, he added, but it should keep its net borrowings in check. The note suggests that borrowing more through short-term instruments by the government along with a “concomitant decline in long term borrowings”.

“Honestly, let’s not chase the rating upgrade mirage,” the note concludes. “Remember India has had a solitary net rating upgrade in the last 25 years! Amusing, isn’t it?”

Source: Internet News papers and Anupsen articles


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