Savings bank account-holders and term deposit-holders can now earn interest at shorter intervals. Until now, banks were required to pay interest on savings account balances and term deposits at quarterly or longer intervals. The savings deposit rate for most banks is 4%pa (per annum); in some cases, it is as high as 7%. The interest rate on savings bank accounts is calculated on a daily basis. Term deposit rates are 8%-9% for tenures of one year and above.
More inflows and a rising index are possible, but may take some time
The markets made...
The prevention of a well known advocate, CM Maniar, from boarding a British Airways flight puts a spotlight on some of the draconian legal provisions which could engender cronyism, nepotism and selective targeting which could harm honest people
On the eve of Diwali, CM Maniar, well-known advocate and former non-executive director of MCX Ltd, was stopped from boarding a British Airways flight because a look out circular (LOC) has been issued against him with regard to the National Spot Exchange Ltd (NSEL) scam. So a 78-year old man, on his way to comfort and help settle his recently widowed daughter, faced the ignominy of having his baggage unloaded and being turned back at the airport.
Wikipedia says, LOCs “are opened to trace absconding criminals and also to prevent and monitor effectively the entry or exit of persons who may be required by law enforcement authorities.” Shouldn’t the police have informed Mr Maniar not to leave the country without their permission? Why was information about his humiliation leaked to the media? Was it a warning to all MCX and FT directors? If so, the question is: Shouldn’t NSEL defaulters, their families and key personnel be the target of LOCs rather than independent directors of group companies?
India is a country where key players in major scandals, such as Warren Anderson of Union Carbide, Win Chadha and Ottavio Quattrochi of Bofors or even a Dinesh Dalmia of DSQ Software, leave the country without a hassle. They also make several trips back via Nepal without even using fake passports. So, when an investigation agency actually issues an LOC, the public sees it as an indicator of the government’s serious intent to bring wrongdoers to book. Is this true? Let’s examine Mr Maniar’s case, to arrive at some conclusions.
Mr Maniar was not a director of the controversial NSEL where a Rs5,600-crore scam took place. He was an independent director on two group companies—MCX and Financial Technologies—along with several powerful retired regulators, Union secretaries and industrialists who quickly resigned from their cushy assignments after the NSEL scam surfaced. Who were these other influential directors? They included former finance secretary Ashok Jha (director of MCX) and former SEBI chairman GN Bajpai, former SEBI chairman (director of MCX-SX, the currency trading segment of the group and advisor). Other directors of MCX-SX include SS Thakur, former controller of foreign exchange, BD Sumitra, former director of CCIL and MV Nair, former chairman Union Bank of India (all resigned in September this year). Then there is Venkat R Chary, IAS, a former secretary, government of India (GoI) and former chairman of the Forward Markets Commission. He was the chairman of MCX, FT and the Indian Energy Exchange of the same group. There is also Ravi Sheth of Great Eastern Shipping, one of the original directors of FT.
My inquiries in connection with Mr Maniar’s lookout notice reveal that 59 people have been put on the list in connection with the NSEL scam. And most of the truly powerful members of MCX-FT group named above are not on that list. The lookout notices issued by the Economic Offences Wing (EOW) (Mumbai) include all the NSEL officials who have been arrested. The group founder, Jignesh Shah, his brother and probably other family members; former CEO Anjani Sinha (now under arrest), his father and a few other senior officials of MCX-FT group such as Joseph Massey. Since information on LOCs is not in the public domain, others may face the same ignominy as Mr Maniar if they attempt to travel abroad without prior informal checking.
This column is not making a case for withdrawing the LOC against Mr Maniar. Neither does it argue that LOCs should be issued against the clutch of regulators, bankers and government secretaries on MCX-FT group companies who were certainly in a position to influence government departments to wink at the rules and grant the exemption that allowed NSEL to exist outside the commodity regulator’s supervision.
The only point we are making is that rules have to be fair, unambiguous and transparently applied. LOCs, like various draconian laws introduced by the government, have been grossly misused to trample over human rights and dignity. What is worse, neither powerful corporate lobbies (such as CII, FICCI or Assocham) nor NGOs have bothered to protest indiscriminate arrests and humiliations in a systematic manner.
They did not do so even when Nimesh Kampani of JM Financial Services, Minoo Shroff (former vice chairman of Raymond), AP Kurien, former executive trustee of UTI and a few others were on the run for most of 2009, because of the LOCs issued against them in connection with Nagarjuna Finance.
In that case, too, we believe the action was politically motivated. Nimesh Kampani was the only real target (he also faced an arrest warrant), due to his connection with Reliance Industries; but other directors suffered collateral damage. The 80-year old Minoo Shroff was stuck in London for months on end and advocate LVV Iyer could not attend his son’s graduation abroad because of the LOCs issued to the 23 international airports and exit points. Consider a few more facts.
• The Supreme Court has asked Subrata Roy of the Sahara group to submit property documents by 11th November. He has still to deposit Rs20,000 crore ordered to be paid to SEBI for repaying lakhs of people who invested in its debentures. Yet, the group founder is allowed to travel abroad. In fact, a moot question is: Why are Sahara’s so-called investors so docile, even though the sums involved are four times the entire NSEL scam.
• LOCs are rarely issued against the biggest bank defaulters even when the bad debts run into thousands of crores of rupees and are backed by personal guarantees of industrialists. A prime example is Vijay Mallya, Member of Parliament, who has not paid salaries and dues to employees or even statutory dues.
• LOCs can be issued by a superintendent of police at the district level or a deputy secretary of the government (source wikipedia) and are misused by influencing these officials. Petty fights, business rivalries or domestic issues are reason enough to have LOCs issued. In fact, the gross misuse of power has led to a decision that LOCs can only be issued by officers of the rank of a deputy commissioner of police (DCPs).
• There are several instances where LOCs suddenly appear on immigration computers 10 years after a problem; or where persons are arrested on their return to India (where there is no question of fleeing the country); or harassed at immigration even while travelling abroad with court permission. Do you know that even film-star Shilpa Shetty had an LOC issued against her after someone objected to Hollywood star Richard Gere kissing her at a public event in a choreographed act?
• Stringent legal provisions meant to protect women are also being unscrupulously misused to the extent that there is an entire website devoted to warning NRIs on how to ‘survive’ LOCs and arrests under Section 498a of the Indian Penal Code. Reading the website suggests that there are as many victims of Section 498a combined with Interpol Red Corner notices as there are battered and deserted wives of non-resident Indians. Many have paid hefty sums of money in blackmail to avoid arrest and humiliation with police officials sharing the loot.
This overarching power of police and investigation agencies can affect anybody at anytime. As with most laws in India, these powers will usually be used against those who are relatively weak, defenceless or law-abiding or as part of vendetta unleashed by the State against whistleblowers. NSEL is a rare example when the same grounds on which an LOC was issued against Mr Maniar are also applicable to a set of powerful former regulators and IAS officials. Now is the time to press for reform, transparency and fairness in the application of draconian legal provisions which cause lasting damage to the lives of honest persons.
Sucheta Dalal is the managing editor of Moneylife. She was awarded the Padma Shri in 2006 for her outstanding contribution to journalism. She can be reached at [email protected]