Last week, this column warned that an internal committee appointed by the Reserve Bank of India (RBI) to suggest ways to migrate from paper-based fund transfers to electronic transfers had, in a burst of zealousness, recommended creating disincentives for use of paper based transactions (cheques, pay-orders and drafts) by transferring the service charge on such transactions to customers and making electronic fund transfers free of charge. We pointed out that India has neither the infrastructure nor the tech-literacy to permit such punitive disincentives.
Many agitated consumers also wrote to the RBI which had sought public comment. Interestingly, without even waiting for the May 15 deadline for accepting public comments, the RBI reacted swiftly to announce that it “has decided not to accept the Study Group’s recommendation of levying a charge for paper based transactions”. It also pointed out that it “had not accepted similar suggestions received twice in the past” and clarified that any recommendations by a study group — internal or external —- do not reflect the views of the RBI.
RTI and bourses
Many activists strongly reject the Finance Ministry’s stand that stock exchanges are outside the purview of the Right to Information (RTI) since they are supervised by the market regulator. Information seekers, however, find that stock exchanges are selectively willing to part with information but sometimes refuse to disclose what ought to be public.
Sachchidanand Paradkar, an investor activist from Nasik, has interesting experiences in this regard. He had sought data on specific disputes referred to stock exchanges between April 2004 and 2006 regarding the Misuse of Power of Attorney by brokers, Unauthorised Trades by Brokers, Non-Receipts of Sale Proceeds from brokers and Misuse of Depository Accounts by brokers. This information ought to be in the public domain at least to warn investors about certain brokers, but Paradkar was told that the information “is not available”.
The two national stock exchanges told him that details of disputes relating to investor grievances were time-barred, but he did get brief details of disputes referred to arbitration based on complaints filed by investors. There were 173 such arbitrations filed with the BSE and 367 with the NSE. Further, 59 arbitration awards at the BSE favoured investors and 125 went in their favour at the National Stock Exchange.
In response to another query, Paradkar was told that Sebi had not scrutinised Member Client Agreements by large brokerage houses even though there are innumerable complaints and media reports about one-sided terms and clauses. This is interesting, because investor associations have been pressing Sebi to vet such agreements for well over a year, but the regulator has failed to respond. Interestingly, the appellate authority rejected several of Paradkar’s appeals on the grounds that it would violate commercial confidentiality.
Among the many entities surreptitiously floated by Stock Holding Corporation of India’s (SHCIL) management in the past six month was SHCIL Hannobe Technologies Pvt Ltd, registered at Cochin. The company, it turns out, is owned by a private individual called Boney Sekh, who is a former employee of CrimsonLogic of Singapore with which SHCIL has a technology transfer agreement for the e-stamping project. Boney Sekh had worked at digitising documents for SHCIL, but it is not clear why he has been permitted to use the SHCIL logo on his website or the prefix SHCIL for his company. After all, with public sector institutions holding over 51 per cent of SHCIL shares, the depository company has always enjoyed the status of a government institution and this is now being usurped by a host of unknown entities. Now that the operations of SHCIL have been taken over by a senior official of IDBI Bank, he may want to get answers to some pertinent questions. For instance, why were payments to SHCIL Hannobe routed through SHCIL Projects, another entity spawned by SHCIL in recent months?
After the initial hiccups, the takeover of Ratan S Mama’s (RSM) audit business by PriceWaterhouse Coopers (PWC) was sealed. But the integration of the two outfits continues to be tumultuous. For instance, the election to the post of PWC’s Senior Partner initially ended in a tie, although Deepak Kapoor was tipped to be the winner. Of the 98 votes cast then, 49 each favoured Ramesh Ranjan and Kapoor. The re-poll was a bigger surprise, because Ramesh Ranjan won by five votes.
The soft spoken Ranjan is highly regarded and handles some of PWC’s most prestigious clients in the Assurance and Audit practice. Sources say that there may be several important movements in and out of PWC before things settle down. For starters, two partners from New York will be posted in India. Of these, Bob Wright is already in Mumbai. There is also talk of some senior PWC partners exploring greener pastures with other big audit firms.