Citizens' Issues
FinMin’s two faces: One unit wants to penalise while the other believes in incentives for the same goal!

While one unit of the finance ministry want to penalise citizens for using cheque and cash, another unit believes in providing 2% incentives to encourage online transactions

 

The finance ministry wants to encourage the use of online payment systems. However, there seems to be two opposing methods being used by the finance ministry to achieve the same goal. While its Financial Services department want to penalise citizens for using cheque and cash, a Committee on Payment Systems suggested giving a 2% incentive on online tax payments.
 
The Committee has suggested an incentive of 2% lower sales tax, service tax, goods and service tax if a product is procured and payment made online for encouraging merchants and consumers to look at internet-based small-value transactions.
 
On 25 October 2012, DD Maheshwari, under secretary in the Department of Financial Services sent out a fatwa to all chief executives of public sector banks (PSBs) asking them to consider charging a processing fee from the customer paying credit card dues either in cash or through cheque. This idea was taken from HDFC Bank that recently increased such charges from Rs50 to Rs100 per transaction. 
 
According the suggestion made by the Committee, the incentive can also be offered to the consumers in terms of value added tax (VAT) refund on the use of credit and debit cards, for encouraging card usage. 
 
While online payment is one of the futures in payment systems, the finance ministry seems to have ignored the ground realities. According to IntenetWorldStats.com, as of June 2012, India ranked at the bottom in top 20 countries across the world in internet penetration. UK was the topper with 83.6% of its population having access to internet the same for India was just 11.4%.    
 
According to a report by Internet and Mobile Association of India (IAMAI) and Indian Market Research Bureau (IMRB), as of December 2012, there were about 15 crore internet users in the country, out of which 8.71 crore accessed it from mobile devices.  
 
Last month, while speaking at a seminar on “Principles for Financial Market Infrastructures and Innovations in Retail Payment Systems”, Harun R Khan, deputy governor, RBI said, “Although, the recent financial crisis did not show any strong evidence of correlation between payment systems and financial stability, going forward, payment systems, both large value and retail, could be the source of instability when the financial transactions moves largely to electronic mode that gives rise to several operational and financial risks.” 
 
In addition, the central bank on 28 February 2013, asked all banks to put in place security and risk control measures to minimise the impact of cyber attacks on electronic payment systems.
 
Unfortunately, it appears that the finance ministry is forcefully intervening into the RBI’s territory of retail payment systems, which is one of the primary functions of the financial regulator.
 

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COMMENTS

gopalanjanaki

4 years ago

That shows intelligence of the person.Spread red carpet for BUDGET&we are taken away by++ points&MISS----------- points&realise very late!!!!PULL the carpet when you are analysing+ points!!! great

Ubaldo C DSouza

4 years ago

Each one wants to show his clout. Enjoy the tug-of-war.

nagesh kini

4 years ago

A clear case of the MOF's left hand not knowing what the right is doing!
What is their mechanism to monitor their fatwas in the form of Directions/Circulars?
None whatsoever!
Cobra string operation exposes them naked!
In their hurry to enhance CASA to window dress balance sheets Form 60 for No PAN all accounts such accounts should be subjected to a specialspot audit.

Finance ministry asks PSU general insurers to ramp up claim management

“It has been felt necessary to contain the losses to improve their financial health ... instructions have been issued to them to achieve this objective through prudent underwriting and efficient claims management,” minister of state for finance Namo Narain Meena said

 
The finance ministry has asked public sector general insurance companies to ramp up their financial health through prudent underwriting and efficient claim management.
 
Minister of state for finance Namo Narain Meena in a written reply to the Lok Sabha said all four PSU general insurers have been incurring underwriting losses over a period of time.
 
“It has been felt necessary to contain the losses to improve their financial health ... Advisory instructions have been issued to them to achieve this objective through prudent underwriting and efficient claims management,” Meena said.
 
The four PSU general insurers—National Insurance, New India Assurance, Oriental Insurance and United India Insurance—have together paid Rs168 crore as dividend in the 2011-12 fiscal.
 
The dividend received in 2010-11 was Rs30 crore, and in 2009-10 was Rs270 crore, he said.
 
Meena further said there was no proposal before the government to list the PSU general insurance companies.
 

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Banks told to issue debit, credit cards with user’s photo

Banks have been advised by the RBI to also consider cards with PIN and signature laminated cards or any other advanced methods to prevent misuse of stolen cards

 
The Reserve Bank of India (RBI) had asked banks to consider issuing debit and credit cards with photographs of the cardholders to prevent misuse of stolen cards, the Lok Sabha was informed today.
 
In a written reply in the Lok Sabha, minister of state for finance Namo Narain Meena said, “Banks have been advised by the RBI that with a view to reducing the instances of misuse of lost/stolen cards, they may consider issuing cards with photographs of the cardholders or any other advanced methods that may evolve from time to time”.
 
As regards with credit cards, banks have been advised by the RBI to also consider cards with PIN and signature laminated cards or any other advanced methods, the minister said.
 

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COMMENTS

PRABHAT

4 years ago

YES , I SUPPLEMENT

S BHASKARA NARAYANA

4 years ago

As all the tamper proof checks, viz., biometrics of ten fingers,both eyes' iris images are embedded in "Adhaar", why not carry this card with Debit card or Credit instead of insisting the Banks to reissue the said cards with photo.

REPLY

MDT

In Reply to S BHASKARA NARAYANA 4 years ago

Thanks for you comment.
Kindly understand Aadhaar is not a card but simply a number that unless connected to the database cannot do authentication.
You may also want to read http://www.moneylife.in/article/can-uid-... and http://www.moneylife.in/article/what-is-... . These two article discusses in detail the future of payment systems.

Ramesh Iyer

4 years ago

If RBI has indeed advised Banks to issue Debit &/ Credit Cards to customers to prevent fraud and misuse of stolen cards, it is certainly a welcome step. However, seems many Banks are not following this 'advise', as a private bank I have an a/c with refused to issue me a Debit & Credit Card with my photo, stating that they had 'discontinued' issuing such cards 'long back'.
I appreciate many of RBI's policies to protect investors' interests, such as -

1. Requirement of Verified-By-Visa or MasterCard SecureCode as 2nd level of protection for online transactions.
2. 'Advising' Banks to carry customer's photo on their Debit / Credit Card.

Though these are steps which would help in transactions within the country, card-holders remain exposed to frauds like skimming, and subsequent misuse of these at International locations (including websites).

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