The Reserve Bank of India’s (RBI) effort to encourage people to migrate from paper based fund transfer to electronic transfers is most welcome. It would mean a faster turnaround of funds in the financial system. Unfortunately, in its zeal to promote electronic transactions, the Committee on Migration to an electronic system recommends creating disincentives for use of paper-based cheques. It wants service charges on cheque processing transferred to the customer and electronic fund transfers and Net banking made free of charge. It also recommends higher pricing of demand drafts, pay orders and Bankers’ Cheques. This is ridiculous and must be contested immediately. India does not have adequate literacy, technology savvy or computer penetration to contemplate such punitive disincentives. In fact, many depositors even refused to move away from old-fashioned passbooks, causing RBI to ask banks to issue them on request. Most of India does not even have electricity to keep computers going on a 24X7 basis. Since this report is posted for public comment, depositors must write to the RBI and lodge a strong protest. The full report is available at www.rbi.org.in under “What’s New”.
What scam?
Why is a routine investigation by the Securities and Exchange Board of India (Sebi) into listing day manipulation of share prices being touted as the unearthing of a major scam? Top Sebi officials would confirm that they received tip-offs on at least four scrips within hours after they were listed or re-listed. This was based on simple market intelligence. First day manipulation is often a way of settling subscription management and is part of every primary market boom. The regulator had to merely tap into its own institutional memory to know this. The Inter-Market Surveillance System (IMSS), which is credited with alerting the regulator, would indeed hasten the investigation by providing real-time data from multiple sources. Meanwhile, the investigation does not cover all scrips ramped up on listing day or all the players involved. A moot question is whether Sebi will go past the bit players to nab the main ones. Even in the demat scam, the investigation never went past the front-entities to the masterminds of the multiple application racket. Instead, Sebi came out with an unworkable disgorgement order and conveniently handed over part of the investigation to the Central Bureau of Investigation (CBI), where it has made no headway.
Refund problems
Institutional shareholders of Stock Holding Corp of India Ltd (SHCIL) met last week to take stock of various decisions of Jayaraman Iyer, the chairman and managing director who has been sent on leave. The Indian Express has reported many of these, but new ones continue to crop up. One such is a complaint by senior citizen Maria Teresa Menezes, who has complained to the consumer court that SHCIL sent her a refund cheque of Rs 17,000 long after she had invested Rs 250,000 in 8 per cent RBI Relief Bonds. She was told this was the “excess amount invested minus interest already paid” to her. On approaching the forum, she learns from SHCIL’s submissions that it was returning the money in accordance with RBI directions. The RBI letter only reveals that SHCIL had bungled in handling the bond subscription but does not instruct SHCIL to refund any money. It had collected money from 107 single applicants and 185 multiple applicants with no retirement benefits. The RBI has now forwarded these complaints to the appropriate department to examine the 250 odd rejections and refunds. Sources say that RBI must check the three-way reconciliation in the Bond Ledger Account between the clearing bank, SHCIL and RBI and how the refunds were made.
Rejected again
The Kolkata police, who have been doggedly pursuing the Dinesh Dalmia case, scored another victory last week, through an appeal filed by the West Bengal government over interpretation of Sec 167 of the Criminal Procedure Code. They challenged a High Court order in the Supreme Court over the commencement of custody, which yielded an important ruling. The apex court rejected Dalmia’s contentions, which had been accepted by the High Court to grant him bail. It ruled that surrender of an accused before a judicial magistrate cannot be taken as a starting point for counting the maximum 15 days’ police remand of an accused, or for the subsequent detention in judicial custody. This means that custody would start only when the accused was formally arraigned. The court further clarified that if a person is an accused in two different cases, then detention in one cannot be taken into consideration while determining the detention in the other case.
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