Regulations
Jan Dhan: Desi Problem, Videshi Terms

RBI must act instead of simply issuing warnings about mutliple accounts opened under the PM’s pet project

 

The finance ministry has set stiff targets for nationalised banks to open new accounts under the Jan Dhan Yojana. But RBI governor, Dr Raghuram Rajan, has warned banks to be careful since people may be tempted to open multiple accounts lured by the prospect of a Rs1 lakh insurance cover and Rs5,000 overdraft.

 

The central bank says that multiple identification options acceptable under the know your customer (KYC) norms make this a possibility. Senior RBI officials have also been warning banks about ‘smurfing’ and ‘money muling’. This is American jargon to describe different money-laundering techniques.

 

Smurfing means splitting deposits into smaller sums to avoid being detected by regulatory systems. Money muling refers to laundering money through another person’s account (that account being the money mule). But weren’t these, and many other dubious, practices exposed by the Cobrapost’s sting operation? RBI then did a perfunctory investigation that ended in a small slap on the wrist to a few banks and a few officials losing their jobs. Dr Rajan has correctly warned banks to avoid duplication of accounts to meet Jan Dhan targets. He probably needs to pay attention to specific examples of aggressive tactics amounting to mis-selling. For instance, HDFC Bank has been spamming mailboxes using third-party databases (Avrial Technologies), with a mailer which says, “There is no minimum credit score requirement for availing its personal loans.”

 

It further claims ‘personal loan eligibility in one minute’ even when copious income and identification documents are required. The Bank used similar gimmicks by offering a 20% discount on e-Bay India for purchases in July but failed to meet its commitment when the response was significantly higher than its budget. Several years ago, RBI had treated such a gimmick by Citibank (free air tickets on a designated amount of credit card purchase) as a class action and forced it to pay up. Hasn’t RBI noticed this mischief or does it absolve itself by issuing a consumer charter and general warnings to people?

User

COMMENTS

LALIT SHAH

3 years ago

Jan dhan - dhan dhana dhan BIGEST JANDHAN GATE

S.S.A.Zaidi

3 years ago

Most of terms except Hawala have American origins

Deepak Mahulkar

3 years ago

The idea is very good to aviod proliferation of schemes like chit funds, ponzy schemes which loot hapless poor people. The governement is not expected to lauch schemes benificial to people as well as keep loop holes in such schemes also. it is for the implementing body to ensure that it is not being misused otherwise no good schemes will ever be implemented for the fear of its abuse.

webkitendfullscreen

3 years ago

I am told that already there are agents which are "selling" these accounts for multiple banks and charging a fee from the poor people promising that they will get an amount of INR 5000 for every account after a year.

This scheme would also result in nothing but a deadly scam for the banking industry if the finance ministry is forced to direct PSU banks to disburse the amount to every account holder. The entire scheme smacks of congress/UPA policies of appeasement and grant.

There is no electricity, no roads in many of the areas. The government should focus its energy on providing better health, education and infrastructure to these villages. Poor people would find a way to earn and borrow money if their basic requirements are fulfilled.

Dayananda Kamath k

3 years ago

this scheme has reduced bjp to upa3. for their failure to punish the guilty they are bringing out new schemes so that catching the culprit will be difficult or make everybody culprit so that nobody will point finger at other..

Ramesh B Mhadlekar

3 years ago

Will they Act is a million dollar question?

Ravindra

3 years ago

Entirely agree. The motive of NaMo behind the scheme is commendable and actually should have been done much earlier (somewhere between the sixty years). Without Bank Accounts only a small amount of the funds reached the actual Beneficiary and lot got filtered to various officials. However, the Bureaucrats and the officers under them will try newer ways of filling their pockets. As CENTRAL BANK, RBI should be on the alert to randomely audit these transactions. If they create a set up with telephone numbers where people can inform RBI, under todays atmosphere lot of people will come forward to report the irregularities.

Java

3 years ago

A penalty for duplicate accounts could be "No Benefits" for the perpetrators.

LALIT SHAH

3 years ago

Rajan is right and his dought is near reality.Those are illiterate having no bank account as P.M. announced sceam within few days crores of account registration by bankers.It smelling some jandhan Gate which will bigger than coal Gate so before giving any benefit scrutinize all account with there photo id. Address with. B responsible none currpt officer's which is very difficult. In short it will be a JANDHAN GATE

Anil Agashe

3 years ago

Duplicate accounts are surely opened in large numbers especially in cities. The amount collected is also very large 1500 crs? RBI must find a way to eliminate duplicate accounts before benefits start flowing. This scheme looks almost as if it has come from NAC!

CSR: Now Coercion & Penalty

Overzealous implementation of CSR is a wrong strategy. Why is BJP-led government doing this?

 

In July this year, I wrote that the United Progressive Alliance (UPA) had stopped just short of prescribing penalties for those corporates who fail to spend the mandatory 2% of their net profit on corporate social responsibility (CSR) projects. The CSR provisions in the Companies Act 2013 (the Act) were clearly structured to introduce such penalties, but had stopped at asking companies to explain the failure to comply.

 

The Narendra Modi government was expected to put CSR rules under the Act on hold and also rework some of its more draconian provisions. Nothing of that sort happened. In fact, The Economic Times reports that Modi sarkar seems set to outdo the UPA-2 on this front.

 

The paper reports that the government is already planning to introduce penalties for failure to meet CSR targets for two or more years. This is regressive and contrary to the prime minister’s poll promise to eliminate bureaucratic hassles and unnecessary red-tape and make it easier to do business in India.

 

Consider how things have played out on the CSR front. In July this year, we applauded the ministry of corporate affairs for expanding the scope of CSR eligibility. We believed that CSR ought to be voluntary, or at least not prescriptive, and must include a company’s core strengths.

 

Instead of doing this, the Modi government is headed in the opposite direction. Industry continues to lobby against CSR, while an army of consultants, who see this as a lucrative business opportunity, are lobbying for stringency.

 

Meanwhile, public sector undertakings (PSUs) and nationalised banks are pulling in different directions on the issue. SCOPE, the apex body of Central government-owned units, reportedly made an audacious suggestion that ‘angel funding’ or takeover and revival of sick-undertakings should be considered part of public sector CSR. A clear recipe for massive write-offs.

 

Meanwhile, banks are being pushed to please the PM by building toilets all over India. The finance ministry and the Reserve Bank of India (RBI) also want banks to conduct ‘financial literacy’ seminars in schools and colleges, leading to much irritation. School managements say that say that election duties and frequent holidays have them struggling to complete their syllabus; they have little time to cooperate with companies wanting to meet CSR ‘targets’ with perfunctory workshops aimed at disinterested students. But nobody seems to care.

 

CSR is laudable when done voluntarily and diligently. It will only lead to mis-directed efforts, fudging and squandering of precious funds when forced upon reluctant companies. The real losers will be entities that are doing genuine and dedicated work for public benefit. With over 14,000 companies expected to spend Rs15,000 crore on CSR, we hope that good sense will prevail about spending scarce funds.

User

Different Kinds of Paid News

How Corporate money power controls the message

 

“Invasion of Corporate News”, an exhaustively researched article by Andrew Edgecliffe-Johnson published by the Financial Times (FT), London, documents how social media is allowing big business to bypass mainstream media to reach and influence people directly. This means that you, the reader, need to learn to differentiate between an independent, well-researched point of view, and an embedded public relations plug—whether it is on television, in your favourite newspaper or on social media. Here is a primer culled from the FT report.

 

Brand Journalism: A new form of reporting is one that’s produced by companies and tailored to project a company’s point of view. Companies hire professional journalists to produce these polished reports, so that the ordinary reader is unable to see them as PR plugs.

 

FT cites the example of oil major Chevron, which runs a hyper-local digital news brand at Richmond, California (where it is headquartered). While it publishes mainly feel-good news, it also helps gloss over allegations about environmental damage. In India, Reliance Industries has hired a team of senior journalists to ‘manage’ its social media image, publish videos and books, to project its point of view.

 

Churnalism: This is the process where PR agencies create slickly produced content that is released directly to people through social media, YouTube, etc, as news. Interestingly, loss-making mainstream media is often happy to ‘embed’ these videos and photographs in their reports, making it a win-win for corporate PR.

 

The report cites the examples of Apple’s iPhone6 launch (fully choreographed with live blogging, perfectly lit images and gushing endorsements from celebrities being re-tweeted) and Microsoft introducing Indian-born CEO Satya Nadella to the media in a similar manner. The head of General Motors recorded an emotive YouTube video of her reaction to faulty ignition leading to fatal crashes prior to appearing before the US Congress hearing.

 

Native Advertising a.k.a Paid News: Advertisements made to look like a genuine news story or video where the reader cannot know the difference. This is called native advertising and is rampant in India, too, having been pioneered by our biggest media house.

 

Owned Media: The whole gamut of direct corporate communication through social media, twitter, blogs or direct-speak by celebrity business corporate honchos, such as Richard Branson, who have millions of followers on social media. These CEOs don’t need mainstream media to get their message out anymore. Prime minister Narendra Modi used this brilliantly to craft a thumping election victory.

 

Interestingly, while the Editors Guild of India has written to the PM to provide more meaningful access to the media, FT says this is a global phenomenon. It says, “… from White House to Wall Street, journalists protest that they are getting less meaningful access to those in power than ever.” 

User

COMMENTS

Aditya G

3 years ago

The (thin) line between journalism and PR is being blurred. Like investing, it's very hard to make out what is noise and what isn't -- until one really pokes around and and look for clues (which takes too much time).

SuchindranathAiyerS

3 years ago

Marshal Mc Luhan obfuscated. (Was he paid off?) The medium was never the message. It was always the money that was the message.

LALIT SHAH

3 years ago

Now a days INDIA facing paid news in corporate and political world.If any journalist try to bring out fact is slapd and call him anty nationalist.
It's pitty that most of NRI audience gathered by sponcered. And awail free air tickets and passes MERA BHARAT MAHAN.kiya hua hai YEH media walo ko

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