The new norms would entail these entities to report even small transactions in the range of Rs10,000-Rs20,000 to both international and domestic destinations in the form of Suspicious Transaction Reports and Cash Transaction Reports to agencies like the Financial Intelligence Unit and the Income Tax department
New Delhi: The government is mulling to tighten reporting norms for international payment gateways and money transfer agencies after some transactions in small tranches of few thousand rupees were reported to be suspicious by law enforcement agencies, reports PTI.
The security agencies have expressed fears that such outlets were being used by militants for money transfers involving small amounts, sources said.
The new norms would entail these entities to report even small transactions in the range of Rs10,000-Rs20,000 to both international and domestic destinations in the form of Suspicious Transaction Reports (STRs) and Cash Transaction Reports (CTRs) to agencies like the Financial Intelligence Unit and the Income Tax department.
The move follows a warning by intelligence agencies that militant groups were getting money in small amounts through foreign exchange bureaux, which have come up in every corner of the country.
The security agencies in their successive reports to the finance ministry have raised serious concerns over mushrooming of money transfer agencies, including some international players, who have their agents in various places.
Though Reserve Bank of India (RBI) officials said that permission had been given to companies to have agents and sub-agents like banks, post offices and important financial institutions, they were unable to give an explanation when questions were raised about the appointment of ‘sub-sub agents’ like grocery shop owners and travel agents by these firms.
Security agencies are apprehensive that militants were using such bureaux for bringing in money from abroad in small amounts to avoid detection and there was no mechanism in place to seek information from these exchanges and that there was no proper compilation of records.
Nifty to find support at 5,500
The market today fell on high volumes, despite the fact that the US market was sharply up yesterday and Asian markets were in the green.
Weak corporate earnings and a stock-specific event led the benchmarks lower today. This apart, the comment by finance minister Pranab Mukherjee that inflation would remain high till December also weighed heavy on investor sentiment.
The market opened higher on a positive trend in the Asian markets this morning, ignited by hopes that the US debt impasse will end soon. The Nifty opened at 5,642, up 28 points from its previous close, and the Sensex added 102 points to start at 18,756. Realty, consumer durables, banking and auto sectors led early gains and the market touched its intra-day high in initial trade as the Nifty rose to 5,645 and the Sensex touched 18,766.
Lower-than-expected results by IT major Wipro pulled the stock down by over 3% in morning trade and this hurt the BSE IT index which was the top sectoral loser. The market gradually drifted into negative terrain in the mid-morning session, on selling pressure in the heavyweights.
The indices bounced back into the positive, but the gains were short-lived, as the market dropped southwards in noon trade following the finance minister’s warning on inflation. Mr Mukherjee said the rate of price rise would continue to be high between August and December, on higher prices of manufactured goods and fuel. This caused worry among investors that the Reserve Bank of India (RBI) could hike rates once again at its policy meeting next week in a bid to rein in prices.
The market fell to the day’s low in the late session, after news that a large investor offloaded nearly half his stake in drug maker Lupin. The investor’s entire stake was valued at over Rs300 crore. At the day’s low, the Nifty lost 90 points from the day’s high to 5,555, and the Sensex fell to 18,474, down 292 points from its intra-day high. However, the market closed off the lows, the Nifty at 5,567, down 47 points, and the Sensex settled at 18,502, a decline of 151 points.
The advance-decline ratio on the National Stock Exchange (NSE) was a negative 592:1139.
In the broader markets, the BSE Mid-cap index tanked 0.88% and the BSE Small-cap index declined 0.36%.
Apart from the BSE Fast Moving Consumer Goods index (up 0.24%), all other sectoral gauges ended in the negative. The top losers were BSE Power (down 1.73%), BSE Healthcare (down 1.71%), BSE Capital Goods (down 1.45%), BSE Auto (down 1.42%) and BSE Bankex (down 1.34%).
DLF (up 1.63%), ITC (up 0.93%) and Maruti Suzuki (up 0.09%) were the top Sensex gainers. The losers were led by Wipro (down 3.95%), Hindalco Industries (down 2.71%), Jaiprakash Associates (down 2.51%), Tata Power (down 1.98%) and Hero Honda (down 1.90%).
The major Nifty gainers were DLF (up 1.31%), Siemens (up 0.71%), ITC (up 0.69%), Hindustan Unilever (up 0.56%) and Infosys (up 0.17%). The top losers on the index were Wipro (down 4.14%), Hindalco (down 3.41%), Ranbaxy (down 2.59%), Jaiprakash Associates (down 2.51%) and Kotak Bank (down 2.31%).
Among the first quarter results announced today, Wipro, Polaris Software and RCF posted weak numbers, setting off concerns over Q1 earnings estimates.
Markets in Asia, with the exception of the Shanghai stock market, ended higher on optimism that the US will avoid a debt default. Encouraging earnings reports from IBM and Apple also supported technology stocks in South Korea with LG Display, Samsung SDI and Samsung Electronics settling higher.
The Hang Seng rose 0.46%, the Jakarta Composite gained 0.68%, the KLSE Composite advanced 0.45%, the Nikkei 225 surged 1.17%, the Straits Times climbed 0.98%, the Seoul Composite advanced 1.16% and the Taiwan Weighted jumped 2.13%. On the other hand, the Shanghai Composite lost 0.10%.
Back home, on Tuesday, foreign institutional investors were net buyers of stocks worth Rs293.29 crore. Domestic institutional investors, on the other hand, were net sellers of equities worth Rs226.92 crore.
Tata Motors today said that it would consider setting up manufacturing facilities in various overseas countries as it looks to expand its global presence. In its annual report for 2010-11, the company said it will also introduce more fuel efficient products and market those in both domestic and export destinations.
The home-grown auto major, however, did not provide any details regarding any possible new overseas location. The company’s stock declined 1.62% to settle at Rs968.05 on the NSE.
State-run mining giant Coal India has blamed early rains and inclement weather in the eastern region for it not being able to achieve the 98.7 million tonnes (MT) target in the first quarter. Already plagued by a plethora of problems like delay in green clearances for its projects that has hurt production in the face of an ever-widening demand-supply gap, the Maharatna company missed the April-June target by 2.4 MT. Coal India fell 0.64% to Rs367.50 on the NSE.
Gammon Infrastructure Projects has achieved the financial closure of the Paradip Iron Ore Terminal Project, which envisages construction and equipping of a berth to handle an annual throughput of 10 million tonnes of iron ore. The company has a 31% equity stake in Blue Water Iron Ore Terminal, the special purpose vehicle implementing the project. Gammon Infra rose 1.25% to Rs16.20 on the NSE.
Serious investigations are going on against Speak Asia across the country, but the company chooses to portray itself as a victim, in an attempt to gain sympathy and more time from its agents who eagerly await their dues totalling over Rs1,900 crore
Speak Asia Online Pte Ltd (SAOL), which claimed to be 'Asia's largest online survey group' and has now changed its tagline from 'Asia's leading integrated market services agency' to 'Asia's largest community of sovereign consumers', is continuing to provide misleading answers on its website even today. In the meantime, Speak Asia has been allowed a meeting with the Reserve Bank of India (RBI) to explain its position by the Bombay High Court.
In an order dated 14th July, a bench of judges Dr DY Chandrachud and Anoop V Mohta, said, "We are of the view that the interference of this court is not warranted. However, in the interest of fairness, an opportunity should be granted to the petitioners (Speak Asia) to submit a representation to the Reserve Bank." The High Court, however, made it clear that even after the Speak Asia representation is made, it expects the RBI to take a decision in accordance with the law.
Disposing the petition filed by Speak Asia, the High Court said, "The bank (RBI) is legitimately entitled to protect the integrity of the financial set up, pending an investigation. Neither an investigation nor the directions issued by the Reserve Bank to facilitate it should be obstructed or curtailed. The bank has in our view acted within its statutory power to caution against remittances abroad in the case at hand."
According to the High Court order, Speak Asia sent a letter to the RBI requesting an appointment on 17th May to which the central bank replied on 16th June seeking a disclosure of information. Speak Asia responded on 20th June, but the matter appears to have rested there, the order said.
Now let's see how Speak Asia has played the High Court verdict to its favour. In an pop-up message to its agents (we are providing an image of the page below as there is no assurance that it will remain on the company's site after publishing this article), Speak Asia has claimed that it has received some 'moral vindication' from the High Court order.
It said, "We have got some moral vindication (for instance) the High Court of Hyderabad restrained harassment or arrest of any official or employee of our company against a complaint made by an NGO (criminal petition 5626/2011). The High Court in Mumbai directed the Reserve Bank of India to give us a hearing to understand our business model 'expeditiously' (writ petition (L) no. 1365/2011 - SAOL & Others vs Reserve Bank of India)."
The pop-up message tries to create a divide between 'them' and 'us', where 'us' is the multi-level marketing (MLM) company and 'them' is everyone else not associated with it. The message reads: "They are a product of misguided thinking, unbridled envy, and a desire to destroy what they cannot build. They are a set of people with deadly intent. They are the opportunity deniers. They are supported, cheered on and encouraged by certain vested interests like our competitors, some corrupt politicians and unscrupulous NGOs who have jumped into the fray to take advantage of our vulnerability."
Now, let us take a look at the company's method to misguide (aka golmaal) its panellists and other gullible people. On the frequently asked questions (FAQs) page (see the image below), Speak Asia says, "RBI, SEBI, Ministry of Corporate Affairs and PMO gave clearance to SpeakAsiaOnline?" For a common reader and Speak Asia panellist, it appears as if the company has already received clearances from these regulators and authorities. However, the reality is completely different.
In answer to this apparent question, the company says, "It has come to the notice of the company through its media sources that because of the negative campaign initiated by some organisations, that RBI, SEBI, the Ministry of Corporate Affairs and PMO initiated inquiry against the working of the company. However, till date SAOL has not been contacted by any of the government departments."
Although, Speak Asia forgot to mention the Income-Tax, Enforcement Directorate and Service Tax inquiries, the High Court order does mention these agencies. The order said, "It has been submitted that at present investigations are being conducted by the Directorate of Enforcement, the Registrar of Companies and by the law enforcing authorities in several states in respect of the activities of the petitioners (Speak Asia)."
Speak Asia has been insisting that the freeze on bank accounts of its distributors and agents (since the company neither has, nor operates any bank account under its name) was placed by the RBI. However, the central bank clarified, and the High Court accepted, that the debit freeze was placed by the respective banks on account of the investigations being conducted by the service tax and income-tax departments.
Last week, the division bench of Justice Ranjana Desai and Justice RV More remarked that the police should create a system to prevent the repetition of frauds like CU Marketing and City Limouzine. Hearing a public interest litigation (PIL) filed by Andheri resident Rajmani Shukla against Speak Asia, the High Court noted that “Having perused the petition, we feel that another scam is in the offing."