Biometric identification is modern day enslavement -Part 2

The Database State is an exercise in outsourcing of government through technologies that govern individuals to admittedly undemocratic entities wherein biometric identification is being made a pre-condition for citizens to have any rights

Database State, a report from the UK revealed how the old maxim, 'If you have nothing to hide, you have nothing to fear' has been given a very public burial. The report states, ”In October 2007, Her Majesty's Revenue and Customs lost two discs containing a copy of the entire child benefit database. Suddenly issues of privacy and data security were on the front page of most newspapers and leading the TV news bulletins. The millions of people affected by this data loss, who may have thought they had nothing to hide, were shown that they do have much to fear from the failures of the database state.” Likewise, creating database containing biometrics is a giant leap towards authoritarian control by data mining companies. It turns citizens into subjects and suspected criminals, who can be kept under leash by control over sensitive data. Through convergence each data can be transformed into sensitive data.


If consent for it is granted by uninformed citizens then citizens become a number on a computer of a state actor or non–state actor engaged in ‘welfare’ services. This would automatically create a file on each citizen. In an effort to appear harmless, the claims are that the file would contain very little information like but as has now come to light it is being linked to ‘preventing terrorism’, ‘stopping crime’ or ‘protecting children’ etc. This in turn creates logic for profiling and tracking citizens based on their financial transactions, mobility, religion, caste, region, orientations, health records and driving record.

Right to privacy and freedom belong to citizens by right. It is not granted by government. A government is the servant of the citizens, not its master. Governments are supposed to seek the permission to limit these rights in certain circumstances. It signals a break-down of a democratic government if it chooses to engage in indiscriminate surveillance of citizens or to impose a system of compulsory identification or to open a file on each citizen or to criminalise citizens who refuse to comply as is proposed to be done by the Indian National Congress (Congress) led government with the connivance of the opposition parties.

When political candidates of Congress party and its allies stood up for elections and sought votes did they seek the mandate to put the voters under surveillance?  

The 'database state' is the tendency of the state and non-state actors to use computers and biometrics to manage society by putting people under watch by mouthing benevolent schemes and excuses.

Databasing people is akin to modern day enslavement by those who are wedded to the faith in property-based democracy. Slavery by whatever name is wrong on principle.

Non-state actors have prevailed on state agencies to adopt "Transformational Government" initiative. It might sound good unless one comprehends that what is being transformed is not government but it is power over citizens under the dictates of non-state actors.

This was attempted by UK’s Tony Blair government, which misled the world and its own citizens about Iraq having nuclear, chemical, and biological weapons programme although it knew that it was not true. Not surprisingly, the British citizens could see through the fraudulent misrepresentation and voted for the coalition of David Cameron-Nick Clegg. UK's Deputy Prime Minister Nick Clegg said, “This government will end the culture of spying on its citizens. It is outrageous that decent, law-abiding people are regularly treated as if they have something to hide. It has to stop. So there will be no ID card scheme. No national identity register, a halt to second generation biometric passports” in the British House of Commons.

Clegg added, “We won't hold your internet and email records when there is just no reason to do so. Britain must not be a country where our children grow up so used to their liberty being infringed that they accept it without question. Schools will not take children's fingerprints without even asking their parent's consent. This will be a government that is proud when British citizens stand up against illegitimate advances of the state.”

But the Sonia Gandhi-led coalition government in India chooses to follow the discredited path of Tony Blair and his UK's Identity Cards Act, 2006. Both, Blair and UKID Act, have been abandoned. 

Given the fact that ‘radical restructuring of the security architecture at the national level’ is underway, when Nandan Nilekani, the chairman of Unique Identification Authority of India (UIDAI) was asked more than two years back as to how tracking of citizens can get facilitated once different databases like National Population Register (NPR), National Intelligence Grid (NATGRID), National Technical Research Organisation (NTRO), Crime and Criminal Tracking Network System (CCTNS), Multi-Agency Centre (MAC), central monitoring system (CMS) , Socio Economic and Caste Census (SECC), National Investigation Agency (NIA), national cyber coordination centre (NCCC), national critical information infrastructure protection centre (NCIIPC), telecom security directorate, Public Information Infrastructure and Innovations and UID are converged, you can actually track all the information. He responded saying, “I don't want to talk about that.” His silence is deafening. But intelligence agencies be it UIDAI or any or any of it incarnations are known for adopting such stances.

Under NATGRID, 21 sets of databases will be networked to achieve quick, seamless and secure access to desired information for intelligence/enforcement agencies, it is quite clear that the biometric databases under creation are meant for such agencies in India and elsewhere. The Rules made under the Information Technology Act, 2000 in April 2011 provide access to any data held by any "body corporate" in India. This does not apply to body corporate of foreign origin.

In such a backdrop, there is a compelling logic for VS Sampath, the Chief Election Commissioner, to rescind the dangerous proposal of Dr SY Quraishi, his predecessor, to Union Ministry of Home Affairs asking it “to merge the Election ID cards with UID”. Such an exercise would mean rewriting and engineering the electoral ecosystem with the unconstitutional and illegal use of biometric technology in a context where electoral finance has become source of corruption and black money in the country. This would lead to linking of biometric UID/Aadhaar, election ID and electronic voting machines (EVMs), which are not as innocent and as politically neutral as it has been made out to be. It is noteworthy that all EVMs have a UID number as well. This will amount to electoral surveillance.

Surveillance is a “shameful act” of supervising and imposing discipline on a subject through a hierarchy system of policing. Michel Foucault, the author of 'Discipline and Punish: The Birth of the Prison' examined the systems of social power through the lens of the 18th century philosopher Jeremy Bentham, the originator of the now iconic Panopticon. This Panopticon was/is a design for a prison in which the inmate's cells are arranged in a circular fashion around a central guard tower. The architectural configuration allows for a single guard's gaze to view all inmates, but prevents those inmates from knowing exactly when they are being watched.

It was aptly observed, “The major effect of the Panopticon: to induce in the inmate a state of conscious and permanent visibility that assures the automatic functioning of power.” This design is a “generalised model of functioning and a way of defining power relations in terms of the everyday lives of men.”

In initiatives like biometric identification the subject, the citizen is seen but he/she does not see. He/she is the object of information, but never a subject in communication. Foucault's Panoptic model is quite valid for biometric database because these databases are meant to ensure real time tracking and profiling of citizens and turns them into subjects and in a slave like situation. Tumultuous colonial history of the technologies associated with surveillance reveal that the origins of surveillance happened during free trade of slaves.

Biometric identification treats Indian citizens worse than slaves. It is an act of identification prior to any act of omission and commission.  It is a case of a deepening of everyday surveillance. It is similar to what was done under the Britain's Habitual Criminals Act of 1869 required police to keep an “Alphabetical Registry” and cross-referenced “Distinctive Marks Registry. The first held names and the latter descriptions of scars, tattoos, birthmarks, balding, pockmarks, and other distinguishing features. This registry of marks was systematically disaggregated into nine general categories pertaining to regions of the body. Therefore there were files for the head and face; throat and neck; chest; belly and groin; back and loins; arms; hands and fingers; thighs and legs; feet and ankles.

The proposed convergence of biometric information with financial and personal data such as residence, employment, and medical history heralds the beginning of the demolition of one of the most important firewalls in the structure of privacy. Such convergence of databases poses a threat to minorities and political opponents as they can be targeted in a situation where government is led by any Nazi party like political formations.

Late Roger Needham, a British computer scientist aptly said, “If you think IT is the solution to your problem, then you don’t understand IT, and you don’t understand your problem either.” It sounds like he was addressing this observation to gullible citizens, political class and the likes of Capt Raghu Raman, the CEO of NATGRID Grid, Sam Pitroda, the head of Public Information Infrastructure and Innovations, Nilekani and C Chandramouli, the Registrar General of India for National Population Register & Census Commissioner.

Safeguarding of citizens' privacy and their civil liberties in the face of an unprecedented onslaught from collection of biometric data and other related surveillance measures that are being bulldozed by unregulated and ungovernable technology companies by overawing the Governments through its marketing blitzkrieg is emerging as fight between the David and the Goliath. Database State cannot be the aim of any democratically healthy government. It is an exercise in outsourcing of government through technologies that govern individuals to admittedly undemocratic entities wherein biometric identification is being made a pre-condition for citizens to have any rights.

In effect, right to have rights is all set to be made dependent on being biometrically profiled and not on constitutional guarantees and Universal Declaration of Human Rights. This is a regressive step that takes citizens to pre-Magna Carta days (1215 AD) or even earlier to the days prior to the declaration of Cyrus, the Persian King (539 BC) that willed freedom for slaves. Should it not be resisted?  

You may also want to read…

Why biometric identification of citizens must be resisted? Part I


(Gopal Krishna is member of Citizens Forum for Civil Liberties (CFCL), which is campaigning against surveillance technologies since 2010)



Ravi S

3 years ago

Privacy or subversion?
Some privacy champions raise the privacy issue which is irrelevant in a poor country like India where about 750 million people starve for 2-square meal, where illiteracy is high, where religion & caste-based-bias continues, rampant corruption & exploitation exists. They forget that India has a law called Information Technology Act 2000. It has been in existence since year 2000 that protects Aadhaar information along with other laws.

Aadhaar registration collects biometric data and bare minimum information (proof of identity, age, and residence) through enrollment form. Peruse the Enrollment-Form with data fields on page-1 and instructions on page-2. No profiling information is collected, like religion, caste, income, property-holding, education etc.

Privacy issues and risks equally apply to information and data (with or without biometrics) provided by people to census office, tax office, passport office, driving license, vehicle registration, land and building registration,
registration of birth, marriage and death, employers (current, past and prospective), banks, credit card companies, insurance companies, telephone service provider, television service provider, internet service provider, internet services (email, video, social media, search engine, chat, voice, file-storage and transfer etc.), registration at school/college, marriage bureaus, post-office and courier services, hospital registration and medical records, visa of US and UK etc.

In India, government departments, public and private sectors have been using biometrics (fingerprints and face photo) for years, decades and centuries in some or all offices. Examples of fingerprints usage are: Land and building registration (since British rule), Defense departments (fingerprints as service record of civilian as well as service
personnel since British rule till now, also for access and attendance now), Planning Commission of India (for access and attendance), census office (for compulsory NPR), Passport, RTO (for driving license), insurance companies, IT, BPO and healthcare companies (for access and attendance), visa of US and UK etc. Aadhaar does not violate any privacy or fundamental right.

India has seen anti-modernization protests in the past too. Some people caused bandh & hartals in protest against modernization and computerization of Banking & Rail-ticket 25 years ago. Today people are very happy to enjoy bank ATM and to book rail-ticket from anywhere. Then they had argued that paper records were better than computers. Now those protesters never want to reveal that they ever protested against computerization.
Ironically, there is no opposition to collection of biometric data at other points of services. People stand in long queues to imprint biometrics for obtaining Indian passport, US, UK visa. The attendance & access of most of the IT & ITeS companies are biometric based. The attendance & access of the Planning Commission of India is also biometric based. People have been imprinting all ten-fingers plus details of eyes and other identification marks on body on the first day of joining employment in Defense department of India (civilian as well as service personnel) since British rule of India. Yet one never opposed all that.
The use of electronic devices provides no privacy; such as mobile phone, internet (particularly social network media), email, television, bank card, traffic camera. At any moment the government and the service provider knows of geographical location of people, of conversation on phone, with whom, what we are reading, writing or watching on internet, and what TV channel we are watching, when and for how long. All this is done under electronic surveillance thru device identifiers like IMEI, IP address, GPS etc.

Embassies have switched over to mechanical type-writers in 2013 after CIA worker Snowden’s disclosures. Government also knows our movements thru the traffic cameras on roads, our vehicle number plate, our face etc.
Despite this knowledge, the privacy champions do not want to stop using mobile phones, internet, TV etc. Their sole objective is subversion of Aadhaar, nothing else, and they will not succeed because Aadhaar has already crossed the critical-mass on 15-Aug-2013 by enrolling about 450 million people, assigning 400 million Numbers and linking 30 million bank accounts for Direct Benefit Transfer across many states. And as of November-2013, 500 million Aadhaar have been assigned.

Ravi S

3 years ago

Who is afraid of Aadhaar & Why?
As the public databases are getting inter-linked one by one thru Aadhaar Number in various States (particularly Delhi, Maharashtra, Andhra), we see the following effects:
1. Middlemen & Officials are finding difficult to continue with corruption in public welfare pensions, scholarships, public health, NREGA, subsidy on PDS Ration, Kerosene, LPG etc.
2. Ineligible, duplicate and fictitious beneficiaries are getting eliminated from public welfare pensions, scholarships, public health, NREGA, subsidy on PDS Ration, Kerosene, LPG etc.
3. Corrupts will find difficult to buy & sell Benami land & building (i.e.under fictitious name).
4. Corrupts will find difficult to open & operate Benami companies for money-laundering.
5. Corrupts will find difficult to open & operate Benami bank accounts for keeping black-money.
6. Tax-evaders will find difficult to evade taxes.
7. Impersonation & proxy will be difficult to commit.
8. Criminals & Terrorists will get detected and tracked thru inter-linked databases of mobile phone, bank account, travel documents etc.
9. Illegal Immigrants will get detected and tracked thru inter-linked databases of mobile phone, bank account, travel documents etc. They will have no place to hide on Indian soil.
10. It will get difficult for Criminals to hide as records are getting accessible to Police from any State of India.
11. It will get difficult to obtain another new Driving License and Arms License from another State once it got impounded.
12. Fraudsters will not be able to steal Provident Fund money.
13. Onion Hoarders will get tracked easily.
14. Dummy candidates will not be able to write competitive exams for others for the sake of money.
15. Ineligible people will not be able to misuse the certificates of income, domicile, education degrees and caste to deprive the eligible people.

Deepak Gupta

3 years ago

The database state already exists for the common man doing a permanent job and paying income tax. Most transactions require some form of identification.

Now the identification is being extended to all residents. Doing it with a PAN and making it mandatory everywhere and using a biometric ID has one major difference - properly designed biometric ID is harder to avoid and fudge for most people.

In case of any universal ID, we need basic protection against use of data for purposes other than those specified in law.

In case of biometrics, we need an additional safeguard - that its use as a password of any kind must be optional and the option supported by additional methods of authentication in addition to biometrics.

In other words, even if the bank requires me to use fingerprints to operate an ATM, I MUST retain the right to also make mandatory for my account an additional password/secure token of some kind.

Why do I say so?
Passwords or any form of secure token are supposed to be private (Only I know mine) and dynamic (I can change it at will, if you somehow copy mine)

Biometrics are neither - they are not private as your prints can be easily picked up by someone following you around. Even more importantly, they cannot be changed once copied by someone. So, they can be used for identifying people, but are "complete nonsense" if used as only method of authenticating a transaction.


3 years ago

Dear MDT / Mr Gopalkrishna,

Privacy is among the least understood concept in public. Most of the people simply abide to the "I have nothing to hide" argument and willingly submit themselves. I personally feel that what makes matters worse is impedance mismatch between the privacy advocates and the readers / audience. Whatever the privacy advocates say, is either too technical that it doesn't help the audience or it comes back to the same argument "I don't have anything to hide". For example http://tehlug.org/files/solove.pdf.

It would be better if you could do a writeup on privacy and why it is important and one which is for the layman.


3 years ago

Despite your praise of UK, they have implemented a spy network over email and social networking, on the lines of the US system exposed by Snowdon. We have to get used to surviellance in the electronic age. It is a choice between corrupt and leaky systems which we have experienced so far and against which there is much popular grouse and agitation, and the efficient systems of UID with updated databases which can be interlinked to plug leakages, ensure rightful services/subsidies and ensure compliance to regulatory filings such as of tax returns. The later will see the country benefit and grow quickly, and also see the improvement of internal security. At a later stage, once things are better streamlined and computerised, the inter-linkage and privacy issues can be given greater attention and addressed.


Sanjeev B

In Reply to Deepak 3 years ago

Deepak, it doesn't work that way.

Privacy is like virginity, once you lose it, you lose it. Ask any film actor whether they have any privacy.

The State has my Permanent Account Number. If I want state entitlements, I should register to pay my taxes (even if I don't need to pay anything). Once this is established, the Permanent Account can be used for debit as well as credit transactions. I think we forget that PAN stands for Permanent Account Number. If it's an Account, let's use it as one. So this will stop dishonest people from extra entitlements. If you want entitlements, show your track record on the payment side too.

To ensure one PAN per citizen, you need to keep track of collections and account for it.

You don't need the biometrics and DNA of your citizens, you just need a one-individual-one-account system.


In Reply to Sanjeev B 3 years ago

Wrong. PAN has proved insufficient with people having multiple PAN nos. in different spellings of name or different names. Biometrics is a must for unique identification to a single person.

Mumbai One

In Reply to Deepak 3 years ago

First you need to understand what is leakage in a system like PDS. All AC room czars think it has to do with ID system need their brain mapped. The leakages are happening not due to lack of an ID, but because of greed and corruption. And believe me, nothing can stop the corruption, bribe at grass root levels.
Secondly, here is something from the minister of consumer affairs, food and public distribution, Prof KV Thomas. He said, "door-step delivery of foodgrains is very crucial and it needs to be ensured by State Governments as provided in the Act. States should create infrastructure for doorstep delivery to prevent leakage and diversion of foodgrains."
He also stressed the need for creation of scientific storage capacity and intermediate storage facilities at various levels.
Dont you think this speaks a lot than your arguments about UID helping plug leakages?


In Reply to Mumbai One 3 years ago

Wrong. It is clearly seen in the existing system that people are able to make multiple LPG connections, multiple ration cards, multiple voter cards, etc. especially if they have residences in two states. Often, the combination or spelling of names is different. This makes it very difficult to trace duplicates across the nation as there could be even hundreds of people with the same name combination so there is no way of knowing whether they are the same person or different people. UID makes identification of such people a very simple matter as a person will be able to register only once with his biometrics and any duplicate registration in the same name or differently spelt name will immediately show up from his biometrics. Similarly, a person who is a high earner and income tax earner, will not be able to claim a benefit under a scheme for BPL as his tax details can be cross-verified through a single UID, which would not be possible in the present system where linking the income tax details with the BPL scheme details would not occur as they will be in two separate databases with no common reference.


In Reply to Deepak 3 years ago

If you claim biometrics to be foolproof then how do you justify an Aadhar card for coriander (dhaniya patti) and mobile phone? Aadhar cards have been created with these name and photographs also.

SC proposes three member panel to probe IPL spot-fixing scandal

The apex court has turned down BCCI's proposal for setting up a special purpose committee to probe spot-fixing scam in the IPL T20 tournaments

The Supreme Court on Monday while rejecting a suggestion by Board of Control for Cricket in India (BCCI) for special committee has proposed a three-member panel to probe spot-fixing in the Indian Premier League (IPL).


A bench of Justices AK Patnaik and JS Kehar proposed a three-member panel headed by former Punjab and Haryana Chief Justice Mukul Mudgal to examine the issue. The Bench also proposed the names of senior advocate and additional solicitor general N Nagehswar Rao and Assam Cricket Association member Nilay Dutta to be part of the panel.


The apex court asked the counsels of BCCI and Cricket Association of Bihar(CAB), which are at loggerheads on the issue of fresh probe in the scandal, to seek instructions on the proposed panel and posted the case for hearing for Tuesday when a formal order would be passed on it.


The bench turned down BCCI's proposal for setting up a special purpose committee (SPC) comprising senior politician Arun Jaitley and Dutta to look into the issue.


It also turned down the plea of BCCI that the proposed panel should find out if further probe is required into all the issues mentioned in the charge sheet filed by the Mumbai Police in the scandal.


The bench said that the panel would conduct an independent inquiry into the allegations and submit its report to the Supreme Court.


"Mumbai Police can go on its own. Let the panel make an independent inquiry and give report to the Supreme Court and suggest remedial measures," it said.


The court was hearing cross appeals filed by BCCI and CAB challenging Bombay High Court's order which had declared BCCI's probe panel in the scandal as illegal.


The apex court on 30th August had heard the petition filed by Aditya Verma, Secretary, CAB, challenging the high court's order refusing to appoint a fresh committee to probe the scam.


CAB has pleaded that when the high court declared the panel of two judges as unconstitutional, it should have appointed a fresh committee to look into the issue.


Does the RBI know how much conflicts of interest it has created?

Interestingly, the time frame of the RBI financial inclusion committee seems to run almost parallel to that of the banking selection advisory panel. This is a very serious issue. I am not sure that this is good practice in terms of governance and especially, at one of India’s key institutions

‘Oh I get by with a little help from my friends’The Beatles

It has become commonplace to see a new committee announced by the Reserve Bank of India (RBI), every other day. The latest in this trend is the banking license advisory panel that was announced on Friday. As the RBI press release notes,

Dr Rajan announced the names of other members of the committee set up by the Reserve Bank to advise it on new bank licences. These were: Smt. Usha Thorat, former Deputy Governor, Reserve Bank of India, Shri Chandrakant Bhave, former Chairman, Securities and Exchange Board of India (SEBI) and Shri Nachiket M. Mor, Director, Central Board of Directors, RBI. As earlier announced, the Committee would be headed by Dr Bimal Jalan, former Governor Reserve Bank of India.”

As I was reading this, I came across an interesting news item , on The Hindu, dated 27th September 2013, which said that:

“The Parliamentary Standing Committee on Finance ... finalised its report on the new bank licences at its meeting here. According to sources, most of the members opposed giving bank licences to corporate houses and the same concerns have been reflected in the report which will be submitted to Lok Sabha Speaker Meira Kumar soon. ... The members also objected the fit and proper criteria, saying it was discriminatory as it gave RBI discretionary powers to accept or reject an application based on certain undefined parameters.... The members insisted that the guidelines issued in 2001, should be the basis for issuing new bank licences.”

Two questions sprang to my mind. Why has there been a rush by the RBI to form a committee to grant banking licenses when the Parliamentary Standing Committee on Finance (PSCF) is looking at the same subject? Why not wait for the report to be submitted to the Speaker and then have the Parliament debate the same, before deciding on the new bank licenses? Why is there an attempt (RBI’s New Financial Inclusion Committee: Bypassing the Parliament?) to undermine the highest authority of our land, the Parliament?

The above issue notwithstanding, two committees (The New Financial Inclusion Committee and the Banking License Advisory Panel) announced recently by the RBI seem to have confirmed the fears of the PSCF in terms of too much discretionary powers being vested with and used by the RBI.

Readers would recall a recent Moneylife article (RBI’s New Financial Inclusion Committee: Rife with conflicts of interests) highlighted two different levels of conflicts of interests in the newly appointed financial inclusion committee. I had pointed out that while Dr Raghuram Rajan is trying to give out banking licences in a fair and transparent manner, several members of the newly appointed financial inclusion committee are associated with groups looking to get a banking licence. The institutions that some of the committee members are associated with are also focusing on the micro-finance/financial inclusion segment for their commercial interests, creating more potential conflicts of interest

Now, on Friday, October 4th, after the RBI revealed three other members of the Bank License Advisory Panel, these conflicts of interests have become even more serious as evident from the discussion below.

Dr Nachiket Mor, a member of the newly announced banking license selection advisory panel, also happens to be the head of the recently constituted RBI financial inclusion (FI) committee. As chair of this RBI financial inclusion committee, Dr Mor has on-going working relationships with several individual committee members who have direct linkages with institutions (Janalakshmi, Bandhan, J M Financial with Mr Vikram Pandit) that have applied for the banking license. And interestingly, the time frame of the RBI financial inclusion committee seems to run almost parallel to that of the banking selection advisory panel. This is a very serious issue. I am not sure that this is good practice in terms of governance and especially, at one of India’s key institutions.

As they often say, the devil is in the details. Let us therefore look at the members of both of the above RBI committees and examine their inter-relationships:

  • Dr Nachiket Mor - who is a member of the RBI banking license advisory panel and also chair of the RBI financial inclusion committee (both of whose terms are almost concurrent) - additionally, is a member of the central board of the RBI. His listed profile at RBI states that “he worked with ICICI from 1987 to 2007 and was a member of its Board of Directors from 2001 to 2007. From 2007 to 2011, he served as the founding president of ICICI Foundation and during this period was also the Chair of the Governing Council of IFMR Trust and Board Chair of FINO. He is now the Board Chair of CARE India and, among others, is also a member of ...the Boards of IKP Centre for Technologies in Public Health and CRISIL”.
  • Dr Mor is also chair of the allotment committee at CRISIL, which has Ms Rama Bijapurkar, Ms Roopa Kudva and HN Sinor as members. Both Ms Bijapurkar and Ms Kudva, are members of the new RBI financial inclusion committee and will be working closely with Dr Nachiket Mor as part of the committee
  • Apart from CRISIL, Ms Rama Bijapurkar also sits as an independent director on Janalakshmi’s Board, which has applied for a banking license. In addition, she is an independent director at Mahindra and Mahindra Financial Services, whose chairman is Mr Bharat Doshi. And Janalakshmi’s chairman, Mr Ramesh Ramanathan and Mr Bharat Doshi are both members of the new RBI financial inclusion committee and they would also be working closely with Dr Mor in the financial inclusion committee.
  • Mr Ramesh Ramanathan, chairman, Janalakshmi, served as a former independent director and Member of Risk Management Committee, AXIS Bank Limited. One of the group companies, Janalakshmi Social Services is to act as Axis Bank's business correspondent. And as noted above, Janalakshmi has already applied for a banking license
  • And interestingly, Axis Bank’s managing director and CEO Mrs. Shikha Sharma, who previously served as the managing director and CEO at ICICI Prudential Life Insurance Company Ltd, is also a member of the recently appointed RBI financial inclusion committee. It must be remembered that Dr Mor and Mrs Sharma were also long term colleagues at the ICICI group. Incidentally, Axis Bank is also a major partner of Bandhan Financial Services Pvt Ltd and Janalakshmi, both of whom have applied for a banking license.

    Well, there is more to the relationships!
  • Mr Ramesh Ramanathan appears to be non-executive independent director at FINO, which services the financial inclusion and micro-finance sector. FINO, incidentally, was founded by Dr Nachiket Mor, as per his RBI profile.
  • Two more relationships that I found interesting are: a) CRISIL, IFMR Trust and ICICI Foundation are working together to promote projects aimed at development of asset classes that will impact low-income households; and b) one of CRISIL’s Independent Directors (Mr HN  Sinor), who was previously at managing director at ICICI Bank, is also an independent director on the board of one of IFMR Trust’s subsidiaries – IFMR rural channels.  
  • And as all of us know, IFMR trust has significant interests in the Indian micro-finance and sector and it also has direct linkages with institutions like Janalakshmi and Bandhan, which have applied for the banking license. Incidentally, Ms Bindu Ananth, president of IFMR trust, is also has a member of the RBI financial inclusion committee and she will also be closely working with Dr Mor as part of this committee.
  • It must also be mentioned that the IFMR trust (through its subsidiary, IFMR Capital), has worked directly with many MFIs, especially during the growth phase of the Indian micro-finance sector, preceding the 2010 Andhra Pradesh crisis. Please see exhibits 1 and 2 (below) which provide the details.

     And Moneylife readers will also recall what happened at Sahayata Micro-Finance, which was the darling of investors and stakeholders like IFMR capital. Besides, several of the MFIs that IFMR capital has worked with have themselves admitted to the existence of broker agents as can be seen from the e mails given in the linked article. And agents, in my opinion, were a major cause of the 2010 AP crisis.
  • And it would also be interesting to note that Dr Mor’s relationship with IFMR trust still continues. As the State of the Sector Report, 2012, Sage Publications, page 116, notes, The IKP Centre for Technologies in Public Health (ICTPH) and partner Sughavazhvu Health Care are demonstrating an innovative managed healthcare model designed to provide high-quality, cohesive and low-cost health services to rural populations.  SughaVazhvu Health Care Pvt. Ltd. is a wholly owned subsidiary of IKP Trust. ...ICTPH and Sughavazhvu are working with IFMR Rural Finance, the Kshetriya Gramin Financial Services (KGFS) network of small branch-based village banks and insurance partners, to design and market a product that will couple fixed-price, pre-paid primary care and insurance mechanisms to pool risk for secondary and tertiary care (page 116).Independently, the websites of ICTPHSughaVazhvu Health Care Pvt. Ltd and IKP Trust show Dr Nachiket Mor as a director. Additionally, the website of ICAAP also lists Dr Nachiket Mor as a director and says under ‘about us’ that: “IKP Centre for Advancement in Agricultural Practices (ICAAP) is jointly owned by IKP Trust (51%) and IFMR Trust (49%).” One final point – Ms Sucharita Mukherjee is a common director serving on the boards of both IFMR Trust and ICTPH.  

Several critical points emanate from the above.

First, as evident from the above, it is clear that many members[i] of the RBI financial inclusion committee – Dr Nachiket Mor, Ms Bindu Anath, Ms Rama Bijapurkar, Ms Roopa Kudva, Mrs Shika Sharma, Mr Bharat Doshi, Mr Ramesh Ramanathan, and Mr Vikram Pandit – have close inter-linkages amongst themselves, both as individuals and through organisations that they serve as independent directors and/or otherwise represent

Second, some of them (Mr Ramesh Ramanathan, Mr Vikram Pandit, Ms Rama Bijapurkar) represent institutions that have applied for the banking license directly

Third, others (Ms Bindu Anath, Ms Roopa Kudva, Mrs Shika Sharma) represent organisations that are directly involved with institutions that have applied directly for a banking license.  They also work very closely with the financial inclusion and micro-finance sector

Fourth, it is also clear that all of the above members of the financial inclusion committee would be working very closely with Dr Nachiket Mor in his capacity as Chair of the same committee. However, what should not be forgotten is the fact that Dr Mor is also a part of the banking license advisory panel, whose time frame, as noted earlier, more or less, coincides with that of the financial inclusion committee. This, in my opinion, again constitutes a serious conflict of interest.

One another factor exacerbates the conflicts of interests and indeed, it has very significant ramifications for the whole process of governance with regard to new bank licensing. Dr Nachiket Mor is also a member of the central board of RBI which means that he will have an impact in terms of choosing the bank licensees in two places – first at the level of the banking license advisory panel and later, at the level of the RBI central board. Please recall Dr Rajan’s inaugural speech which states the process for determination of banking licenses: 

“We are in the process of constituting an external committee. Dr. Bimal Jalan, an illustrious former governor, has agreed to chair it, and the committee will be composed of individuals with impeccable reputation. This committee will screen licence applicants after an initial compilation of applications by the RBI staff. The external committee will make recommendations to the RBI governor and deputy governors, and we will propose the final slate to the Committee of the RBI Central Board.”

Thus, given the above, I have no hesitation in stating that the banking license selection process has been rendered arbitrary and huge conflicts of interest have entered the fray. Thus, the concerns of the Hon PSCF, are indeed genuine and they must be addressed. All of these need to be seriously looked at by all concerned –Hon Chair, Parliamentary Standing Committee on Finance, Hon Speaker of The Lok Sabha and several other stakeholders including the Hon Prime Minister and Hon Finance Minister!

iI would like to make it absolutely clear that I have greatest regard for many of these professionals including Dr Nachiket Mor. What I am questioning is the process of governance at RBI in giving out banking licenses and as well as in establishing the regulatory framework for financial inclusion in India, which is to have an impact on very large numbers of low income people.


(Ramesh S Arunachalam has over two decades of strong grass-roots and institutional experience in rural finance, MSME development, agriculture and rural livelihood systems, rural and urban development and urban poverty alleviation across Asia, Africa, North America and Europe. He has worked with national and state governments and multilateral agencies. His book—Indian Microfinance, The Way Forward—is the first authentic compendium on the history of microfinance in India and its possible future.)





Anil Agashe

2 years ago

Great article


3 years ago

Excellent article. Readers may also be interested in the following article:
"New Bank Licenses, Eligibility Evaluation" available at naavi.org



In Reply to Naavi 3 years ago

The link to the referred article is here:http://www.naavi.org/?p=1734

Ramesh S Arunachalam

3 years ago

Please see this associated article



3 years ago

Dr.Manmohan Singh, Mr. Montek Singh Ahluwalia and Dr.Raghuram Rajan are Economic Hit Man (EHM) sent by USA.

They will work for USA and not for India.

It is not correct to have Dr. Raghuram rajan as RBI Governor and to avoid the media attention on his appointment, Indian government staged a mock attack on Indian army, declared as attack by terrorists or Pak.

Ramesh S Arunachalam

3 years ago

Dear All

In response to your request, here is the piece on conflicts of interest and past crisis.


Ramesh S Arunachalam

3 years ago

For many of you who either called me and/or wrote in and requested information on conflicts of interest and financial crises with implications for regulation, I am working on a short (very non-technical) piece that relates conflicts of interest to financial crises globally and outlines implications for regulation and regulatory committees. I start with the market crash of 1929 and pecora hearings of 1933 and traverse through many global crisis situations (very briefly) and finish it with the LIBOR conflicts of interest issue as well as the 2010 AP micro-finance crisis and briefly highlight what role conflicts of interest played in fostering the crisis and the associated regulatory/supervisory failure. Thanks for your kind requests. The same will appear at Moneylife within a couple of days or so. Some of you also requested a perspective on whether or not business houses should be permitted into banking and the same will also be available in a short non-technical piece soon. Thanks for all of your feedback and much appreciated and I will factor all these in as I write further. Thanks again

Ramesh S Arunachalam

3 years ago

You may wonder why I have dwelt so much on the topic of independence (or lack of inter-dependence) amongst members in committees with mandates as large as the financial inclusion committee and the banking selection advisory panel

One of the most critical reasons for the importance attached to the topic of independence in any committee relates to conflicts of interest.

There are several issues here:

(1) Conflicts of interest hinder judgement and affect decision making;

(2) judgement and decision making are what committee members are asked to do; and

(3) Committee members must feel free to think, express, question, and decide in the best interest of those they ultimately represent (the country at large).

And all of these apply very much to committees with mandates as large as the financial inclusion committee and the banking selection advisory panel, both of which are under the aegis of a great institution (with rich traditions) like the RBI.

Let us not forget lessons from Satyam and other companies that had 5 star boards with members being hugely inter-related (and dependent). These failures are too large for all of us to push into the background.

I rest my case!

Laveesh Bhandari

3 years ago

I beg to differ. Just the fact that they all know each other and sit on the same boards, has no bearing on conflict of interest. By your rules we will never be able to put up any committee of experts since good experts are few, they will necessarily know each other.


Ramesh S Arunachalam

In Reply to Laveesh Bhandari 3 years ago

Thanks and it is not the fact that they know each other that creates a conflict.

Sorry and I would kindly like to set the record straight.

First, Two of the members of the newly appointed RBI financial inclusion committee are Mr Ramesh Ramanathan and Mr Vikaram Pandit and they will be working closely with Dr Mor. Mr Ramanathan represents Janagraha Financial Services Pvt Ltd which has applied for a banking license. Likewise, Mr Pandit has joined up with J M Financial and has applied for a banking license. Now, Dr Mor is board member of RBI and he happens to head the new financial inclusion committee and is also a member of the banking selection advisory committee – both these committees are under the aegis of the RBI and both almost meeting at the same time.

Sorry but I beg to strongly disagree – the above constitutes a serious conflict of interest. I am very sure that this cannot happen anywhere else but India

There are many more conflicts of interest but let me give you a couple of examples. IFMR Trust which is represented (through MS Bindu Ananth) on the new financial inclusion committee will be working with Dr Nachiket Mor (who also seems to have an on-going working relationship with the IFMR trust as has been written in the article through various organisations that he represents), who is on the banking selection advisory panel. And IFMR trust has a relationship with Janagraha which has applied for a banking license. This is one more conflict of interest

Let me give you one more example and wind up my arguments! AXIS Bank has appointed Janagraha Social services as a banking correspondent and it works very closely with Bandhan financial services and both Bandhan and Janagraha have applied for a banking license. And Axis Bank is represented through Mrs Shika Sharma on the new financial inclusion committee and Mrs Sharma will work closely with Dr Mor as part of the financial inclusion committee of which he is a chair and Dr Mor is also part of the banking selection advisory panel, besides being a board member of RBI - which means that he (Dr Mor) will get two shots at recommending (for or against) licensees. This is yet another conflict of interest

There are many many more conflicts but I am tired of stating them over and over again.

I cannot convince those who don’t want to be convinced and sometimes, as Mr Vijay Trimbak Gokhale suggested, it may perhaps be best to let the Hon Supreme or Other Courts decide on whether the above constitute conflicts of interests or not. People like you are slowly pushing me to this view, although, I prefer to avoid the Hon Courts on such matters

Tell me, given a 120 crore odd population, couldn’t we find 12 unrelated and competent people to do the job for the financial inclusion committee (which in opinion, is itself redundant as there is a live committee under Dr K C Chakrabarthy - it has some of the best experts too and it was created just in 2012 and so, there is no rationale for the new Financial inclusion committee). The same goes for the other panel as well!

It is such kinds of conflicts of interests that led to the global sub-prime and it such conflicts that caused the AP 2010 Micro-finance crisis and God alone knows what could happen in the future...

Thanks for your views anyway!


3 years ago

India is a kaleidoscope of conflicting interests. Starting with the Constitution of India that uses words that are stripped of meaning by contradicting itself at every word! No wonder our Courts are what they are. The RBI ceased to be Central Bank and Monetary Authority and lost its purpose at the stroke of a certain midnight hour as did English, History, truth, laws, governance and all the other ugly British inventions that were asked to "Quit India". Has anybody read the Hilton Young Currency Commission's white paper, or the Radcliffe Committee Report? Everything that the RBI was created to set right are now rife and endemic to India.

Ramani Venkatraman

3 years ago

Good article and a bold approach. Though it was appearing to be a chakravyuh reading through the inter-connectivity of individuals involved, the final point made is loud and clear and needs to be commended.We need more such critical analysis of goings-on at such apex institutions.

Ramani Venkatraman

Ramesh S Arunachalam

3 years ago

Dear Colleagues,

Links given in Comments no 10 are reproduced here separately and hopefully, they will work





These are also available in the main article


Ramesh S Arunachalam

3 years ago

Dear Colleagues

The links are not coming in the comments fully. So those of you who are interested in getting the links, please KINDLY write to me at [email protected] and I will be happy to send you the links.

All the links in the previous comment are available in the main article of course and they work. I have print screens of all the web pages as well as downloaded pdf files and so, even if the links change or don’t work, I have the web status as of yesterday!

Interestingly, Prof Sriram (who taught at IIM,A) also alerted me to one another FACT which, if true, will have a significant DIRECT bearing on the conflict of interest issue and also composition of the RBI banking selection advisory panel as well as the RBI financial inclusion committee.

This is the fact that Dr Nachiket Mor and Dr Raghuram Rajan were batch mates at IIM (A), 1987. I was not completely sure of the same, until I received Prof Sriram’s e mail, although I must confess that I had heard of this from several sources

Post Prof Sriram's e mail, I did my own research and I found a Hindu Business Line quote on the same which said that Dr Mor and Dr Rajan, were IIM (A) batch mates from 1987 PGP. I also found from a list from IIM (A), which lists Dr Rajan as 1987 PGP, Ms Roopa Kuduva as 1986 PGP and MS Shika Sharma as 1980 PGP.

Thanks Prof Sriram for alerting me to the fact which seems to be true and given that Prof Sriram taught at IIM (A) for several years, I would be strongly inclined to take his word as CORRECT. However, we still need official confirmation of this fact


Have a nice day all of you!

Business Line Quote - http://www.thehindubusinessline.com/opin...

IIM (A) List - http://www.iimahd.ernet.in/institute/abo...

Ramesh S Arunachalam

3 years ago

Dear Colleagues

Thanks to Prof Sriram from whom I received an e mail and for whom I have the highest regard for, I would like to correct an inadvertent error – Ms Rama Bijapurkar is not a part of the recently constituted RBI financial inclusion committee. My humble and profuse apologies for this small inadvertent error to all concerned and I think, the maze of inter-relationships perhaps confused me.

That said, I had noted the relationship of Ms Bijapurkar correctly in the previous article (http://www.moneylife.in/article/rbis-new..., and I quote,

“Besides, the respective websites indicate that Mrs Rama Bijapurkar is a common independent director serving on the boards of CRISIL, Janalakshmi Financial Services Pvt Ltd and Mahindra & Mahindra Financial Services Ltd. Ms Roopa Kudva, Managing Director & CEO, CRISIL is a member of the (financial inclusion) committee, as is Mr Bharat Doshi, CEO of Mahindra and Mahindra Financial Services Ltd.” Mr Ramesh Ramanathan, Chairman Janalakshmi, is also part of the financial inclusion committee

Therefore, while Ms Bijapurkar is not directly on the financial inclusion committee, her conflict of interest CONTINUES because she is a common independent director across three institutions – CRISIL (http://crisil.com/about-crisil/board-com..., Mahindra and Mahindra Financial services Ltd (http://www.mahindrafinance.com/managemen... and Janalakshmi Financial Services (http://www.janalakshmi.com/about-us/boar... – whose representatives are members of the financial inclusion committee of which Dr Mor is the chair (please see http://www.rbi.org.in/scripts/BS_PressRe.... Please also remember that Dr Mor is also part of the banking selection advisory panel

A further point must be mentioned here as this adds to the conflict of interest issue. Ms Bijapurkar is part of the allotment committee at CRISIL (http://crisil.com/about-crisil/board-com... which has the following members:
1. Dr. Nachiket Mor, Chairman
2. Ms. Rama Bijapurkar
3. Ms. Roopa Kudva
4. Mr. H.N. Sinor


3 years ago

First of all how come shri Raghuram Rajan a person of Indian origin with dual citizenship is appointed to this high office. They normally serve the interests of IMF, World bank and also USA.What you see is the unknown hand of USA


V Rajendran

In Reply to captainjohann 3 years ago

True, Time will tell. I only wish the author Captain Johann is proved wrong. V Rajendran

V Rajendran

3 years ago

The views expressed in the article are bold and unbiased. Justice should not only be done but should also appear to have been done. It is quite reasonable to question the urgency in constituting a committee now with these members. Maybe they will do a good impartial job. But still, are there no one else in RBI and again, what is the urgency now?
V Rajendran


Ramesh S Arunachalam

In Reply to V Rajendran 3 years ago

Well said sir and you have put it much better than I did.

You are absolutely right when you say that the committee may (or even will, in all probability) do an impartial job but the issue is that some of them have significant familiarity and linkages to the commercial financial world and also to potential bank licensees in the immediate context. The latter is where a significant conflict of interest arises!

In fact, the whole idea is to have diversity in any committee so that counter-balancing forces are available and that is the best possible way to hope to negate conflicts of interest (if they ever arise) and also overcome risk. Diversity will also ensure that there is enough argument and a range of perspectives are considered.
Why have just former regulators or bankers select bank licensees and especially, when some of them could still be (or are) actively involved with the potential licensees or applicants.

Diversity will also encourage out of box thinking. Let us face it, banking is risky business and bank licensing is even riskier – from that perspective, I am sure it may be better to have a diverse group select the licensees.

The expert regulators are already there at RBI – what is the fun in packing the committee with retired RBI people or retired SEBI chairman. One ex regulator should suffice and the rest of the experts are at RBI.

A doctor would have been a refreshing change – some one like Dr Shetty for example (just an example please)! Or an economist with alternative perspective like Reethika Khera or a co-operator like Amritha Patel or a financial journalist like Sucheta or someone like Ramachandra Guha or even a Harsh Bogle (who by way went to IIM Ahmedabad) or a Kiran Mazumdar Shaw

This country has enough eminent people with commitment and skills. The key is to bring them in and get the best out of them!

I hope people take my article in the right spirit and do the needful!

Thanks again for your kind words Sir!

V Rajendran

In Reply to Ramesh S Arunachalam 3 years ago

Dear Shri Ramesh

You have now elaborated much now. The article with my comments and you additional inputs, gives a very clear picture of your views, which cannot be disputed at all. Best wishes for success in all your endeavours. V Rajendran

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