Consumer Issues
Kotak Mahindra Bank and ING Vysya Bank merger cleared

The merger was cleared at different Extraordinary General Meetings of both banks' stakeholders

 

Extraordinary General Meetings of Kotak Mahindra Bank and ING Vysya Bank have passed the proposal to merge the two banks on Wednesday.

 

The exchange ratio of shares for the deal has been set at 725 shares of Kotak Mahindra Bank for 1000 shares of ING Vysya.

 

The Mumbai based Kotak Mahindra Bank and Bengaluru based ING Vysya had been in talks for a possible merger of around Rs15000 crore.

 

The combined banking entity will have a branch network of 1,214 branches.

The deal will go through after approvals from the Reserve Bank of India and the Competition Commission of India. Once the deal goes through, the combined bank will be the fourth largest private bank in India.

 

ING Vysya's employee union had called for a strike to protest the proposed merger. The unions were demanding job security for the current employees of ING Vysya.

However, now that the merger proposal has been passed, there seems to be little the strike can achieve.

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Receiving money through NEFT can put you in trouble

Despite directions from RBI, banks refuse to share details of the entity sending money through NEFT

 

The National Electronic Fund Transfer (NEFT), used by almost everyone to transfer money quickly, can also put the receiver in a difficult position. The main reason is, there are no details available about the remitter or sender and if the amount is large, then the recipient may end up facing Income Tax (I-T) Department queries. Remember what happened with Aishwarya Rai, when in 2006 she received a parcel containing 23,000 euros (around Rs14 lakh at that time) sent by an unknown person from the Netherlands?

 

Well, with banks hesitating in sharing details of the person or entity who is transferring money via NEFT, it may be you next time. Although the Reserve Bank of India (RBI) has directed banks to furnish appropriate details in passbook or account statement for credits sent and received by the customer through NEFT, all the recipient gets is just a name and amount. “A very generic mention as 'NEFT' or 'NECS' does not help customers in identifying the source of credits, particularly where multiple credits are afforded to their accounts through these products. The Core Banking Solutions (CBS) of banks should be enabled to capture complete information from the relevant fields in the messages, data files which can be displayed to customers when they access their accounts online or provided to them additionally when they approach the branch counters, help desks, call centres,” the RBI had said.

 

However, all the recipient gets to know is just a name. There are no details like sender’s PAN number, address and the cause/remark for the money transfer.

 

Often money launderers are found using bank accounts of low-income individuals for transferring money. In addition, due to the forceful implementation of the Jan Dhan Yojana, we have about 10 crore new bank accounts, out of which 73% do not have a single penny. But consider that tomorrow, if somebody uses these accounts to launder money, then without detailed information about the remitter, how is a poor Kalawati supposed to answer queries from the authorities, including but not limited to I-T department. In the absence of detailed information about the remitter, how will she explain the unaccounted money remitted into her account through NEFT?

 

Receiving funds from unknown remitters becomes an even bigger issue for non-governmental organisations (NGO), who need to give a receipt as well as I-T exemption certificate. If there is just a name of the remitter, how and where is an NGO, like Moneylife Foundation, supposed to send the receipt?

 

Another issue with NEFT fund transfer is the delay. According to RBI policy, banks need to afford credits to beneficiary accounts or return transactions (uncredited for whatever reason) to the originating / sponsor bank within the prescribed timeline. It also directed banks to move towards hourly settlement starting from 9am to 7pm on all week days and between 9am to 1pm on Saturdays. Yet, it appears that banks are still using the last part of the work-day or first hour of the next day for NEFT transactions.

 

Coming back to the Aishwarya Rai episode, the actor was grilled by the Customs official for two-and-a-half hours at the international airport as soon as she landed in Mumbai from Jodhpur. The parcel was allegedly sent by one Avineshwar from the Netherlands marked to the actress. It arrived at the Foreign Post Office in Mumbai during September 2006. Besides the currency, it also contained a top-brand shirt, a pair of binoculars, a DVD player and other electronic items. Following a notice, Aishwarya's father Krishnaraj Rai, on 15th November met Custom officials to clarify her position. However, the officials insisted to know details from Aishwarya, due to which the actor had to come to Mumbai to clarify her position. She was shooting for the movie 'Jodha Akbar' in Jodhpur at that time. After the enquiry, she was give a temporary clean chit by the Customs.

 

Therefore, it is high time the central bank issues another order mandating banks to share all details of the remitter who is sending money through NEFT or any other payment method to the recipient and actually penalises banks if there are persistent complaints about flouting the RBI’s order.

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COMMENTS

Gopinath

2 years ago

1. Banks should be made accountable for investigation in every fraud arising out of cheque bounce. Other wise they will keep on issuing cheque book to every unreliable person. Actually they should ban the cheque felicity to that account holder for life time and Tag it to his PAN no so that he cannot get it in any other banks if he bounces his cheque 3 times. If it is implemented 50% of our all court cases will get reduced.
The whole country will feel proud of the system.

R S Murthy

2 years ago

Banks are fully aware of KYC rules and procedures. While opening the accounts are they not seeking address and identity proof?
Banks are not supposed to receive Rs.50000 or more in cash form for remittances without the PAN number. All single remittances of over 10 lakhs comes under scrutiny. In all remittance challans there is a place for the signature, name & address of remitter. Usually depositor himself deposits into his acount, he signs and writes his name.
When 3rd party deposits banks can easily verify the details and pass on them to the beneficiary. If banks are doing so it is nothing but negligence and derliction of duties. Even on our specific request if banks fail to provide we can always approach Ombudsman.
Still banks fail to provide or refuse to provide details, we can inform that the bank is remitter and make them a party in the proceedings initiated by Tax authorities. Then it is for the Banks to prove who is the real remitter.

REPLY

MDT

In Reply to R S Murthy 2 years ago

Thanks for your comment.
And thank god, finally you saw the light after the barrage of your comments. The article also say that banks should share complete details of remitter to the beneficiary. This exactly is not happening at present. In addition, when there are few remitters, then you may not face any issue, but when there are several remitters, then how would an individual or NGO is supposed to chase each one if banks fail to provide details?

R S Murthy

In Reply to MDT 2 years ago

I could have replied in one lot all the points. It becomes lengthy. That is why I choose to put it in stages. Opening of an account is a contract between the customer and banker. Customer is entitled for certain benefits and priveleges and banker is entitled for certain charges. What all I do with my account say deposit and drawl, I do not need any details from the bank. If banker debits my account with charges, credits with interest or outside remittance, banker is duty bound to provide all particulars. Banker will not get unquestionable right to play with my account. If he is not taking care to protect my interests, I can always hold him responsible. We remit LIC premiums, electricity charges, property tax, telehone bills on line.The details of the remitter and his policy number, telephone no is provided to the beneficiary. This enables the beneficiary to account for properly. Then why not in the case of NEFT? We have to counter the bankers with valid reasons. They have to comply. No exscape. Whether it is one remitter or many, banker is bound to provide full deetails when he has choosen to touch my account. When I touch his ATM is he not asking for charges. Then how can he get away after medling with my account.

lamp

2 years ago

This is a really issue, some organisation to evade income tax or TDS payment to employees , are resorting to transfer the salary from third-party account into the employee account , where employee is in a fix on how to file his income , do we have some mechanism to monitor this, expose this ?

Peruvemba Subramanian Ramachandran

2 years ago

This is all the more true for organisations, whose members use NEFT for paying subscriptions or members or subscribers to magazines,etc. the amount being a fixed sum, one is hard pressed to identify the amount to the correct subscriber/member. I had experienced for the last 2 years from a Nationalised Bank, in respect of our coop society membership subscriptions.

Suketu Shah

2 years ago

NEFT has the loopholes mentioned but let us not overlook the fact that this was created by Congress led Chidambaram and not BJP.This means Congress created these loopholes.Let us give BJP some time to plug those loopholes.The article has valid points but bottom line is this problem has been created by Congress when they launched NEFT a few yrs ago.

R S Murthy

2 years ago

All readers kindly go through the news item appeared in Times of India on 6th January 2015.CBI collected data from 20 states and 7 UTs and found that there are 22,45,655 NGOs operating. Of these2,23,478 (just less than 10%) had filed their annual returns. This does not includes details from MP, Odisha, TN, Karnataka and Chattisgarh. Shall we accept nonavailability of details of remitters be the reason for not furnishing the accounts. One can imagine what sort of remittances are flowing through NEFT or RTGS into these accounts.NGOs are not celestial bodies to remain free from any regulation.

REPLY

Gupta

In Reply to R S Murthy 2 years ago

Valid point. Charities/NGOs are a popular mode of money laundering. But that is precisely whey details of sender should be available on NEFT/RTGS so that these laundering NGOs cannot claim ignorance about sources of funds...

R Balakrishnan

2 years ago

A debate is not warranted at all. Simple disclosure of who has sent the money. Absolutely essential and if PMLA is to be followed in spirit and letter, banks must disclose this as a matter of routine. Banks unfortunately are the biggest agents for laundering.

Dipakkumar J Shah

2 years ago

Now in the name of PSB Merger , State Bank of India with their associates Bank like State Bank of Bikaner and Jaipur reduced their FDR Rates in two way and side. One way resuced the FDR Interest rates in line with SBI Rates , and second way reduced Senior Citizens additional rates which were given herebefore 0.50 % now reduced to 0.25%. At the time of Presentation of Budget it was assured to give 1 % additional rates of interest to seniors. But now reduced to 0.50 % and reduced further in line with SBI 0.25%. This is a one kind of Reducing the Competition between Bank to Bank which was here before!!
CCI is not observing any thing from such action !!!!!

Anil Gidwani

2 years ago

Very timely article. We in India do not understand the need to question deposits into our accounts, which is also used to create legal rights (as for example an illegal occupant depositing in a society's account). Even deposits should be allowed to be restricted to deposits with the account-holder's signature only.

Another commenter said that the account-holder should have the right to return the deposit. How can that happen if the deposit is in cash with an unknown signatory?

An easy way to get someone in trouble: deposit black money into his/her account!

REPLY

R S Murthy

In Reply to Anil Gidwani 2 years ago

Mr.Anil, one has to be very careful particularly with his bank account, constantly keep a vigil. With regards to your question of depositing cash by an unknown person, If banker is specifically requested by the customer to reverse the entry, they have to comply. What they do with that amount is not my look out. Let them keep it with them or return to the remitter or deposit into Government Treassury. Why we should bother. Any credit into my account should come from the persons or sources, I am entitled to get. My account is not a dust bin where any one can dump any rubbish. If once I reject the credit, I am not answerable to anyauthority as I am not the owner.

Dipakkumar J Shah

In Reply to R S Murthy 2 years ago

While giving services to customers , who can view their accounts all over the world. It is restricted by not allowing direct view from net banking!!!!

R S Murthy

In Reply to Dipakkumar J Shah 2 years ago

My submission is one has to look into his own account and ensure all debits and credits are in order and explainable

R S Murthy

2 years ago

Mrs Sucheta Dalal, I know you are trying to provoke me. Kindly understand my bank account is my private property and not a parking place where any one can keep his idle funds. Moreover I am entitled to use money that belongs to me alone. I have no right to claim ownership for those funds for which I have no account. Moreover my account no is not publicised. It is informed to the people with whom I have dealings.
Now let us come to accounts like Money life where you publish the account number in media soliciting the contributions. When the details are required do not seek remittances through NEFT or RTGS. Receive only through cheque or DD. We are seeing the debates going on money laundering and still say the rules are draconian. Unless we support the law makers, how financial discipline be brought?

REPLY

Gupta

In Reply to R S Murthy 2 years ago

Just like people find it more convenient to buy things online, they also find it convenient to pay bills and donations online! Why take away the option from institutions doing good work. I'm certain that lot of people who currently pay online would not have enough motivation to write a cheque and send. That would kill such institutions. What is the harm in giving the sender's details to the receiver? If I send money to your account, point is taken that you should check and not use the funds. But it harms no one if you get my details along with the money. Hope you will agree...

Sushil More

2 years ago

Many times, the NEFT amount received does not inform the name of the sender. It merely states a number. How can anyone know the identity of the remitter and how to explain the same to Income Tax authorities.

Sucheta Dalal

2 years ago

Don't you think it is unfair and simplistic to extrapolate your situation to everybody else with out an attempt to understand the dimensions of the issue?

Moneylife Foundation legitimately receives donations through NEFT -- it is very convenient. As a tiny NGO we need the convenience. But we dont know who these generous donors are unless they write to us separately.
This is ridiculous and the law leaves us vulnerable to questions we cannot answer!!
Articles are written with an effort and because of genuine difficulties -- not merely because we have nothing to do one fine morning. Also, we have written it after many efforts at getting information and talking to the RBI about it drew a blank!
Maybe people need to join the efforts to fight wrong policies instead of knocking efforts without knowing the background.
I am sure my strong reply will immediately lead to the usual angry response from you -- but let me tell you in advance that such thoughtless comments made it very disheartening for activists to fight issues of public interest.

R S Murthy

2 years ago

Each one of us are aware from where and whom we are likely to receive funds. By chance if funds land up into our account from unknown sources, what prevents us from asking our banker to reverse the entry and return to remitter? We need not have to do it immediately but as and when we notice we can act upon. Every one has to go through their account and scrutinize all transactions at least once in a month or a quarter. If any one wants to enjoy such remittance and later call it as harassment is not fair.

Ralph Rau

2 years ago

It is extremely disconcerting to read this. The RBI needs to get its act together.

A government official could be accused of corruption as any credit in the official's account could be deliberately placed there my someone who wants to get the official into trouble.

Bosco Menezes

2 years ago

Excellent piece ... we need to make sure we note down the details regarding each inward remittance, if it does not appear in the pass book .... so if an enquiry does come (a year or two later in all probability), we can provide the necessary info to the authorities.

Stock manipulation: Vishvjyoti Trading

Vishvjyoti Trading rose 6259% in a year and half

 

Vishvjyoti Trading (Vishvjyoti) has a ‘diversified trading business’. Apart from ‘trading in textile yarns’, it also trades in shares and securities. The promoter’s stake was just 1.05% as on 30 September 2014 down from 65.28% in September 2012. But the price has been moving up by 2%-5% every single trading day from June 2013 to March 2014, with just about one trade a day. From March, trading volume increased to approximately 100 trades a day. Its financials have played no role in the price spurt. With a revenue of about Rs55 crore, the company has reported a profit of Rs3.29 crore. The stock price is a shocking 115 times the earnings per share. With just 143 individual shareholders, the stock price has shot up by 64 times or 6,259% to Rs24.80 as on 22 December 2014 from an adjusted price of Rs0.39 as on 3 June 2013. Vishvjyoti has been suspended in the past for not complying with the listing agreement by the BSE. While SEBI talks a lot about controlling market manipulation, it actually does little about it.

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