Consumer Issues: RBI Code to Control Mis-selling

The Reserve Bank of India (RBI) is formulating strict guidelines to discourage bankers from mis-selling products and to hold them accountable for all the products they offer. “From the principle of ‘caveat emptor’, (Latin for ‘buyer beware’), we have to move to the principle ‘caveat venditor’ (‘seller beware’) and are going to formulate the code for it,” said Deepali Pant Joshi, RBI’s executive director, while addressing the annual conference of the Banking Codes & Standards Board of India (BCSBI). The recent Nachiket Mor panel report on “Comprehensive financial services for small businesses and low-income households” had held the caveat emptor principle responsible for fundamental flaws in the customer protection architecture and for creating large losses for customers.

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House Committee puts NSA on notice over encryption standards
Amendment would remove requirement that the National Institute of Standards and Technology consult with the NSA on encryption standards 
 
An amendment adopted by a House committee would, if enacted, take a step toward removing the National Security Agency (NSA) from the business of meddling with encryption standards that protect security on the Internet.
 
As we reported with the Guardian and the New York Times last year, the NSA has for years engaged in a multi-front war on encryption, in many cases cracking the technology that is used to protect the confidentiality of intercepted communications. Part of the NSA’s efforts centered on the development of encryption standards by the National Institute of Standards and Technology, which sets standards that are adopted by government and industry.
 
Documents provided by Edward Snowden suggest that the NSA inserted a backdoor into one popular encryption standard, prompting NIST to launch an ongoing review of all its existing standards.
 
The amendment adopted this week by the House Committee on Science, Space, and Technology would remove an existing requirement in the law that NIST consult with the NSA on encryption standards.
 
In a “Dear Colleague” letter, the amendment’s sponsor, Rep. Alan Grayson (D-FL), quoted our story on the NSA from last year.
 
“NIST, which falls solely under the jurisdiction of the Science, Space, and Technology Committee, has been given ‘the mission of developing standards, guidelines, and associated methods and techniques for information systems,’” Grayson wrote. “To violate that charge in a manner that would deliberately lessen standards, and willfully diminish American citizens’ and businesses’ cyber-security, is appalling and warrants a stern response by this Committee.”
 
Grayson’s amendment, which is part of a bill that funds NIST, was approved by a voice vote Wednesday.
 
Grayson’s office says it is working on a broader reform package to address the problems with NIST and the NSA.
 
Even if the current bill makes it through the House and Senate and is signed into law, NIST is expected to continue to consult with the NSA on encryption issues. NIST itself does not have a large staff of cryptographic experts. But advocates hope the amendment would signal to NIST that Congress expects the agency to be serious about protecting rather than undermining encryption standards.
 
“NIST is in no way precluded from interacting with NSA as a result of this amendment, but the message will be clear an agency that subverts the legitimate work of another agency will face consequences,” Grayson wrote in his letter to colleagues.
 
Courtesy: ProPublica.org

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Falling Standards of SBH Branches
Falling Standards of SBH Branches
I was reading an article about improving customer service at ATMs, when I thought I should share my forgettable experience with State Bank of Hyderabad (SBH), a few days ago. It was a long painful story which stretched for three days in the hot sun with loss of precious hours. But I will summarise the key issues below:
 
1) One branch was not accepting cash deposits to non-home branch accounts. I wanted to deposit money to a friend’s account in Vizag from Hyderabad which was rejected.
2) Another branch was forcing me to use the recently rolled out Green Channel.
3) If I did not, I was asked to deposit money through GeoSansar and incur additional transaction charges (I visited a GeoSansar branch which was bang opposite the branch).
4) ATMs are horribly maintained, without any security or swipe card for entry.
5) The branch deputy manager, instead of helping me out, was asking me to open an account with their branch (I was there to deposit a sum of Rs9,500 into a friend’s account).
 
I am not sure if this is happening only in Hyderabad or across India. Branches need to educate customers about why Green Channel was introduced rather than force customers to use it (I had no cash left in my debit card as I had already withdrawn it for this transaction). All this lowers the way people view public sector banks in India.
Raghavendra Kopalle, Hyderabad, by email
 
Not Enough Doctors
This is with regard to “Are modern hospitals death traps?” (Moneylife, 15 May 2014). The recent Supreme Court judgement awarding a sum of Rs6 crore as compensation for medical negligence by AMRI Hospitals is most appropriate. Quite often, doctors are negligent in discharging their duties which can result in fatal consequences.
 
Government hospitals are not commercial; but they are unable to cope with the heavy rush of patients. Healthcare and medical help must be available to all citizens free of cost, especially to senior citizens; contributions towards this can come from a fund created by the Central government/ state governments through a portion of income-tax and other taxes. Private doctors and hospitals, too, must offer senior citizens at least 50% concession.
 
An adequate number of quality hospitals and nursing homes must be opened in every corner of India. The younger generation must be encouraged to opt for the medical profession as there are not enough doctors for our overpopulated country.
Mahesh Kumar, by email
 
Pressure On Supreme Court Judges?
Media reports about the judges of Supreme Court Division Bench are talking of pressure in the hearing of infamous Saharashree-case. One member of the Bench has now retired and the other has expressed a desire to recuse himself from the re-constituted bench to hear the case. It is, indeed, a cause of worry. We need the independence of judiciary. Allegations coming directly from the concerned judges need a proper investigation by the Chief Justice of India.
 
To effectively check such incidents, it becomes necessary to take urgent measures for a final decision on long-pending appeals filed by Supreme Court registry before Supreme Court itself against verdicts of Central Information Commission. A division bench of the apex court had desired, long back, on 26 November 2010, the constitution of a larger bench to decide the multiple issues which also included the similar matter of pressurising judges of higher courts.
Subhash Chandra Agrawal by email 
 
Need of Indians
Moneylife  has great articles, researched reports, interesting editorials and write-ups about personal finance, business, etc. It has a very nice interface for MSSN members. The Stockletters and Investool are useful.
 
In all, I feel elated and I am prepared for better financial future. Each day, I spend 30 minutes on the Moneylife website. The best part is that Moneylife is like a shelter home for distressed souls, like me, who have so many questions. There is a logical line of thought that needs to be approved or second consulted.
 
One can breathe easy, feel light as Moneylife is  packed with solutions to make right moves in today's corruption-ridden business,  paid media, misleading and flashy advertising of financial products. Moneylife makes financial jargon easier for readers and gives them practical tips.
 
I believe it is the great effort that Moneylife’s team puts into research that brings out Investool, Stockletters and great stories (articles).
 
Kindly bring out something about Chanakya’s Arthashastra and its relevance in Indian economy and personal finance in future editions. As people claim to know Chanakya’s Arthshastra but they are not able to put it across well to the audience.
 
I hope Moneylife team will be able to do this in its future editions. I sincerely hope that the Moneylife team will continue to work on research and enlighten the readers to get hold of facts from fiction. This is because it is the need of Indians in personal finance.
Madhur Aggarwal, by email
 
Savings Habit
This is with regard to “Now, children above 10 years can operate own bank account, ATM card”. Could not be better for ensuring the savings habit. But, the lawyer takes over. What about bouncing cheques? A minor cannot be prosecuted. Therefore, the chequebook needs to mark out that this is a minor’s account, next to the account-holder’s printed name. ATM card for such accounts is a bit of a worry. Kids may be harassed by their seniors; maybe even kidnapped. If a maximum amount per day is fixed, it may or may not help. Frustrated crooks, often, turn violent.
 
Yet, with safeguards, the habit must be encouraged. 
Bapoo M Malcolm
 
Concerns Adequately Addressed
This is with regard to “An Open Letter to CEC on electoral reforms” by Dr S Santhanam. As one who has read and reviewed Dr Quraishi’s book, I would say almost all the concerns have been adequately addressed.
Nagesh Kini
 
Block headed mindset
This is with regard to “Life Insurance: Mis-selling of Term Plan with Return of Premium” by Raj Pradhan. The question that we need to ask ourselves is: "Why are companies coming up with premium return plans at all?" The simplest answer seems to be the blockheaded mindset of the consumer who doesn’t want to pay for a service and wants to get everything free. As long as people don’t recognise the fact that they have to pay for the service that they want, no point in blaming companies. If greed is there, consumers will get cheated.
Chilukuri KRL Rao
 
Can You Time The Market?
This is with regard to “The Bull Rule: Your key to market-timing” by Debashis Basu and Jason Monteiro. This is one of the best articles one has ever read on Indian equities. Interestingly, every wealth management expert, especially HDFC Securities, denies outright that you can time the market. This is done with the intent of looting clients. Moneylife is the only magazine that keeps emphasising that you need to buy at the right time and sell at the right time.
Suiketu Shah
 
No Experience
This is with regard to “Beware of banks selling non-banking products.” These banks appoint relationship managers (RM) only to sell non-banking products to customers. These RMs have no experience of selling these products and land customers in a soup.
Doraiswami Sukumar

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