Complete ban on encrypted communications not desirable: DoT

"Banning of encrypted communication is not desirable as long as some solutions exist to get the (data) intercepted in readable format. Therefore, accent should be on regulation of these services in such a manner that security assistance needs and communication security needs are balanced," an expert committee set up by the DoT said in its report

New Delhi: In some relief to BlackBerry, the telecom ministry is understood to have said that a complete ban on encrypted communications is not desirable as long as solutions exist to have the data intercepted in a readable format, reports PTI.

"Banning of encrypted communication is not desirable as long as some solutions exist to get the (data) intercepted in readable format. Therefore, accent should be on regulation of these services in such a manner that security assistance needs and communication security needs are balanced," an expert committee set up by the department of telecom (DoT) said in its report.

Recently, Canada-based Research In Motion (RIM) came up with a solution for real-time interception of its Blackberry Enterprise Service (BES) after seeking several extensions of deadlines for nearly a year.

The government had earlier set 15th August as the deadline for RIM, the maker of Blackberry, to provide the country's security agencies with interception keys to enable real-time tracking of its popular messenger and corporate e-mail services in readable format.

Besides RIM, Nokia is another player that provides a push mail facility to its subscribers.

The solution provided by RIM is being tested by the DoT, which is expected to give its report by the month-end.

The ministry of home affairs (MHA) and Intelligence Bureau (IB) have been writing to the DoT that all types of communications, including encrypted communications, which take place through mobile devices, internet and websites, should be interceptable and made available to security agencies in readable, understandable, printable and audible format.

Earlier, the MHA had also stated that if no solution is found for any encrypted service, those services should be banned or blocked.

The expert committee also said that service providers should take permission from the DoT before launching any enterprise or consumer service that could pose a security threat.

Permission should be accorded or denied within 15 days of receipt of the application, the committee said.

As far as possible, the infrastructure should exist in India, the report stated.

According to the Indian Telegraph Act, 1885, and the licencing terms and conditions for telecom service providers, companies are required to provide a lawful interception and monitoring solution for any service they provide.

RIM uses powerful encryption to encode email messages as they travel between BlackBerry devices and a computer-the BlackBerry Enterprise Server (BES)-designed to secure e-mails.

RIM had earlier insisted that the company does not possess any master key to decode the messages, as it is randomly generated on customers' Blackberry smartphones.

The government has extended the deadline several times to get a solution from RIM. It is estimated there are about one million BlackBerry subscribers in India.

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R-Cap completes 26% stake sale in Reliance Life to Nippon

The transaction, which was announced in March, pegs the total valuation of Reliance Life Insurance at approximately Rs11,500 crore ($2.6 billion). Following the deal, Reliance Capital will hold a 74% stake in Reliance Life

Mumbai/Tokyo: Reliance Capital has completed the sale of a 26% stake in its life insurance venture Reliance Life to Japan’s Nippon Life for over Rs3,000 crore, reports PTI quoting the Anil Ambani-led firm.

The entire transaction proceeds of Rs3,062 crore ($680 million) from the Japanese financial services major have been duly received by the company, Reliance Capital said in a statement.

The transaction, which was announced in March, pegs the total valuation of Reliance Life Insurance at approximately Rs11,500 crore ($2.6 billion). Following the deal, Reliance Capital will hold a 74% stake in Reliance Life.

The deal has received all regulatory approvals required for its completion, said Reliance Capital, the financial services arm of Anil Ambani-led Reliance Group, which has interests in telecom, power, entertainment and infrastructure businesses, among others.

Commenting on the development, Reliance Capital CEO Sam Ghosh said that Nippon was coming on board as a valued strategic partner in Reliance Life Insurance.

“Nippon’s vast experience of over 122 years will help strengthen Reliance Life Insurance’s position as a leading and world-class insurance company in India,” Mr Ghosh said.

Nippon Life Insurance president Yoshinobu Tsutsui also said the Japanese firm was keen to work with Reliance and establish a long-term partnership that is mutually beneficial for both companies.

Nippon Life, also known as Nissay, is the seventh-largest life insurer in the world and the largest private life insurer in Asia and Japan.

It posted revenues of Rs3,49,834 crore ($80 billion) and a profit of Rs12,199 crore ($3 billion) for the fiscal year ended 31 March 2011.

Reliance Life started operations in 2005 after the acquisition of a life insurance company by Reliance Group.

Currently, it is one of the largest insurers in terms of the number of individual policies sold by any of the 23 private life insurers in India. The company has sold over 7 million policies and managed assets of about Rs18,000 crore ($4 billion) as of 31 March 2011.

While addressing shareholders last month, Reliance Capital chairman Anil Ambani had said the company was at an advanced stage of talks for a stake sale in its asset management and mutual fund businesses to Nippon Life as well.

Aiming for the leadership position in the group’s various financial businesses, the billionaire industrialist also announced that Reliance Capital would pursue a banking foray and the entity could be named ‘Reliance Bank’.

The company has also received feelers from potential investors interested in acquiring a stake in its general insurance venture, he said.

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Assocham opposes new classification norms for NBFC NPAs

“NBFCs should be allowed to deploy surplus liquidity in government securities, treasury bills and money market with maturity beyond 30 days. For computing total financial assets, cash and bank deposits, such instruments may be deducted and treated as part of financial assets,” said Assocham secretary general DS Rawat

Bangalore: The Associated Chambers of Commerce and Industry of India (Assocham) has opposed the Reserve Bank of India’s (RBI) proposed new classification of the secured and unsecured advances of non-banking financial companies (NBFCs) as non-performing assets (NPAs) if the overdue period exceeds 90 days, reports PTI.

Under the existing norms, an unsecured asset overdue beyond 90 days and a secured asset overdue beyond 180 days are treated as NPAs.

“NBFCs are a major source of funding for unorganised sector of the economy. The revised classification will eventually increase capital requirements of NBFCs and their cost of lending,” said Assocham in response to the draft recommendations of a RBI working group.

It also suggested an enhanced time frame of five years to achieve the proposed Tier-I capital to risk weighted assets (CRAR) ratio of 12%, instead of three years as proposed by the working group.

“NBFCs should be allowed to deploy surplus liquidity in government securities, treasury bills and money market with maturity beyond 30 days. For computing total financial assets, cash and bank deposits, such instruments may be deducted and treated as part of financial assets,” said Assocham secretary general DS Rawat.

On regulating loans to stock brokers and merchant bankers, it suggested that status quo may be maintained as the present restriction of capital market exposure of 10% of net worth by banks will restrict the ability of NBFCs to lend to this sector.
To increase CRAR from 100% to 150% for capital market exposure and 125% on real estate exposure, the chamber said this will increase the cost of borrowing for NBFCs and also be a deterrent for banks to lend to NBFCs.

Borrowing through external commercial borrowings (ECB) route or NBFC is currently prohibited. It should be allowed so that NBFCs have a window to raise funds at substantially low rate of interests.

Any further tightening may create systemic risk for the sector. Mr Rawat said no asset size ceiling should be insisted if the NBFCs are not accessing public funds for registration with the RBI.

Inter-corporate deposits may be excluded from the definition of public funds where the lending company has not received any public funds and both the lending as well as borrowing company belong to the same group.

As the term business has not been defined, companies which are holding long-term investments in shares of group companies (and thus are merely investment companies) may not be considered as carrying on the business of NBFCs.

To tackle the problem of bad assets and asset recovery, the RBI working group has proposed that NBFCs should be brought under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act.

The chamber said it is a bold step and NBFCs should be able to access the service of Debt Recovery Tribunals as well.

Existing non-deposit taking NBFCs having a net worth above Rs500 crore and desirous of converting to NBFCs-D should be allowed to do so automatically with intimation to the RBI.

Also, assessing officers may be directed to issue nil tax deducted at source (TDS) certificates wherever the customer base exceeds 1,000 subject to the condition that the assessed pays an advance amount equal to the average of its tax paid in last three years.

NBFCs account for nearly 12% per cent of advances of the total financial system and can play a major role in furthering financial inclusion. There are 12,630 NBFCs registered with the RBI providing credit delivery in asset financing and hire purchase. In 2010-11 they delivered credit to the tune of Rs4.62 lakh crore.

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