Money & Banking
On the Digital Highway without a Seat Belt
Prime minister (PM) Narendra Modi’s mega campaign to go cashless may, in the long run, lead to transformation like his much-needed Swachh Bharat initiative. We are a cash-based economy; over 68% of transactions happen in cash and the push to get, at least, urban, educated Indians to switch to cashless payments is necessary and long overdue. Starting with his radio talk (Maan ki Baat), the PM’s slogan of ‘My Mobile, My Wallet, My Bank’ has been amplified by leading bankers, e-payment companies, Union ministers, NITI Aayog officials and high-profile bureaucrats. But people won’t change just by being shoved in a particular direction. Moreover, in the short run, the pain in accessing one’s own money is very real. The government needs to work harder to make the switchover easier, by providing adequate infrastructure (telecom coverage, Internet connectivity), safety and ease of transactions and proper grievance redress. Unfortunately, the effort to push e-payments seems driven by the need to hastily correct the massive failure of currency management after demonetisation, rather than a genuine desire to bring about a paradigm shift. Let’s look at a few decisions that are urgently needed to ensure that the switch to cashless transactions is both, safe and permanent. 
 
1. Beneficiaries Must Pay: The first step is to encourage and incentivise e-payments by scrapping ‘convenience’ charges and transaction charges. So far, it has been a sellers’ market. So ticket booking agents (makemytrip, cleartrip, etc, or Bookmyshow) and even principals (Jet Airways) conveniently turned the logic on its head and decided that we, the consumers, must pay for the ‘convenience’ of getting tickets online. Airlines used to offer hefty commissions to travel agents who did the hard work of selecting the best route and the lowest fare option; the customer did not pay. Today, there are no travel agents; the consumer does all the hard work of searching and selecting; and also pays for the alleged convenience. We need to ensure that beneficiary companies, at least, share the convenience. But what about movie theatres and airlines which are able to save on ticketing and box-office costs? This is the best time to do it because they need our business at a time when discretionary spending has dried up substantially.
 
2. Regulation of E-wallet Companies: Information technology experts will tell you that most apps and e-wallets collect a lot of sensitive customer data by seeking omnibus permissions from not-so-savvy users. According to a report by medianama.com, leading payment apps get access to your Internet history, bookmarks, and even really sensitive data such as IMEI number, saved Wi-Fi network info and the MacID. They record audio info, modify contacts and even use call logs to make calls. Many e-wallets will save  credit/debit card details used to transfer money to the wallet without your permission. 
 
This increases the security risks for users, without their knowledge. If the data is hacked, we, as individuals, are in no position to track the source of the leak and we have no access to easy grievance redress either. We need to have clear rules on what information can be collated by apps and their liability spelt out, in case there is a large-scale data breach or even if an individual consumer has a complaint. Will every minister of the NDA government, who is dutifully promoting e-wallets, take up the issue of regulation as well?
 
3. Grievance Redress: This is an issue that we have been agitating for several years through Moneylife Foundation, our not-for-profit entity involved in advocacy and financial literacy. At a social gathering, recently, a leading industrialist and a retired police chief were narrating interesting stories about how their domestic helpers and cooks had adapted to technology, using it to transfer money to their village in Bihar and Odisha through ATMs.
 
While this is, indeed, very heartening, it is also a fact that ATM PINs are easily shared with the family because of ignorance. In one case, a domestic helper’s account, which had her precious savings of over Rs70,000, was hacked. The hacker, pretending to be a banker, claimed that the account was being tested to ensure that a link to her mobile phone was working effectively and she should read out the number received in an ATM. The unsuspecting woman ended up giving her OTP (one-time password) six times, until the bank itself noticed something amiss and blocked her account. A well-known consumer activist, who is helping the lady recover her money, related this story to me; how many are so lucky? 
 
As Dr KC Chakrabarty, former deputy governor of the Reserve Bank of India (RBI), told me in a recent interview, “You may push a person to do digital transaction; but once a person has lost money at an ATM or in a digital transaction, he will stay away for 10 years. All over the world, unless the bank can prove that the customer is at fault, his money should first be credited to his account. That is a global rule. This is not yet implemented in India.” The reason for not notifying consumer protection regulations is rather perplexing, especially when RBI deputy governor, 
SS Mundra has publicly acknowledged that the increase in online transactions has led to a manifold surge in customer complaints. Addressing a public meeting on 23rd May, he had said that these complaints relate to electronic transactions, unauthorised fund transfers, fraudulent ATM withdrawals using duplicate cards, phishing, vishing, etc. And yet, on 31st August, RBI only issued a draft regulation proposing to limit customer liability instead of notifying formal rules. These regulations propose to shift the onus of proving wrongdoing or carelessness on the part of the customer to the bank. They will also ensure that the money lost is immediately credited back to customer accounts pending investigation. Isn’t it strange that RBI has not been asked to notify these regulations even while a nationwide campaign to go cashless has been launched from the highest office in the land? RBI must also be asked to notify its much-touted consumer charter and take responsibility for its implementation. The charter must prescribe clear penalties for banks’ lapses and amend the banking ombudsman regulations to empower it to initiate stringent action. Instead, an unworkable consumer charter has been put out in the public domain and RBI seems to have no intention of holding banks strictly accountable for treating customers fairly.
 
4. Financial Literacy: The buck for spreading financial literacy also stops at RBI’s doors. The central bank, as is its style, works at an excruciatingly slow pace on most issues;  it is probably the slowest on consumer protection. Two years ago, RBI took charge of over Rs3,500 crore of unclaimed cash deposits that were lying with banks and set up the Depositor Education and Awareness Fund (DEAF). This money could have been put to excellent use today to spread financial literacy using modern tools to spread the message. 
 
Two years later, DEAF has little to show. It took a year to grant accreditation to a few NGOs and another year to sanction small sums to be spent on workshops to a few of them. Worse, DEAF will simply not engage with people in the field. Another effort to reach out to rural consumers under the aegis of RBI and with support from banks is similarly chugging at a snail’s speed. This is not the pace at which the PM operates; but then, why doesn’t someone push RBI to act, or take away these responsibilities and allow it to remain India’s monetary authority? At a time when people are going through enormous hardship to access their own hard-earned money, being pushed into driving along the digital highway without a safety belt will be even more insensitive. 

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COMMENTS

JAMBUNATHAN RAMANATHAN

4 months ago

I request you to kindly conduct a survey and inform the pitfalls in each and every money wallet so that we can benefit and choose the best among them.

Bal krishna Gupta

4 months ago

World over the trend of using digital payment system is in vogue. The risks if any are one in million and if the user has notbeen negigent in assing his pin or password or the device itself the banks generally pay.

2. Regarding "Convenience Charge" there can be norms decided by the RBI. That there are costs involved in setting up IT infrastructiure, staff and real estate and huge investnent need to be made by Ewallets or apps cannot be denied. However excessive profiteering needs to be discourages.
The customers gain by not having to go to banks to draw cash so often to pay for utilities, the banks gain by having had to keep less cash as well as lesser footfalls hence lesser staff and smaller premises.

As users dont withdraw cash in buls and so often they tend to get more interest on their deposits. Most often than not shops/establishments give discounts for using ewallets/debit/credit cards too. Buying from the comfort of home the users reduce traffic on the roads and parking problems too.

Regarding the RBI slow on implementation of DEF, would request the RBI to tweak the acronym. I feel though being promoted during times of Cash Crunch the intentions are pious and well meaning.

As regards risks and frauds, there are enough ctivists and vigilente groups like MoneyLife to bring relief t the victims as well as take the perpetrators or the banks, eWallet companies to task. As of November end the approximate figures are as under: Mobile wallets: Paytm, Mobikwik, Freecharge, State Bank Buddy, ICICI Pocket 18 Crore
150,000 to 200,000 Airtel telecom recharge counters in UP alone.
Internet Banking: 15 Cr (Estimate). (Internet Connections: 46.2 cr )
Debit Cards: 73 Cr (used for payments online; to withdraw cash, at point of sale (POS)

Kamal Garg

4 months ago

Convenience or any charges by any name is a complete fraud and should be stopped forthwith. No convenience or transaction charges should be levied for any fund transfer (through NEFT, etc.), no convenience or transaction charges should be levied for any salel or purchase transaction including at fuel retail outlets, similarly, no convenience or transaction charges should be levied for any type of payment made through Debit card. At best, such rationalised charged can be levied in case of payment through credit card and definitely not through internet banking or debit cards.

Ramesh Mehta

4 months ago

Convenience charge for tickets booked online at airlines or theater operators own web sites does not make any sense. its pure rip off...

Bapoo Malcolm

4 months ago

Lovely headline. Perfect fit.

Kumar Swamy

4 months ago

Yes, the 'convenience charge' for online transactions is a farce and should be made illegal.

Gururaj Rao

4 months ago

Access to sensitive data by e-wallet companies is scary. With poor people also jumping into the e-wallet bandwagon, consumer protection should be tightened up. Can Moneylife invite statements from various e-wallet companies on how good their protection system is so that consumers can select the best of the lot? Such an exercise will also help such companies to tighten up and eliminate loopholes.

New Rs100 notes from RBI soon, older notes to continue
The Reserve Bank of India (RBI) will shortly issue Rs100 denomination banknotes, with some changes on both sides of the note, an official statement said here on Tuesday.
 
However, the old notes of this denomination will continue to be legal tender, it added.
 
"The Reserve Bank of India will shortly issue Rs 100 denomination bank notes in the Mahatma Gandhi Series-2005, without inset letter in both the numbering panels, bearing the signature of Urjit R. Patel, Governor, Reserve Bank of India, and the year of printing '2016' printed on the reverse of the bank note," the statement said.
 
The design of these bank notes to be issued now is similar in all respects to the Rs 100 bank notes in Mahatma Gandhi Series-2005 issued earlier having ascending size of numerals in the number panels, bleed lines, and enlarged identification mark, on the obverse.
 
"Reserve Bank of India had also issued Rs 100 denomination bank notes with the ascending size of numerals in the number panels but without bleed lines and enlarged identification mark. These bank notes will remain in circulation concomitantly with the bank notes being issued now," the statement added.
 
The apex bank did not say how many such notes would be printed.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Income Tax department seizes Rs130 crore post-demonetisation
The Income Tax Department has carried out investigations into over 400 cases post-demonetisation seizing as much as Rs 130 crore in cash and jewellery, an official statement said on Tuesday.
 
"The Income Tax Department has carried-out swift investigations in more than 400 cases since the demonetisation of old high denomination currency announced by the government on November 8, 2016.
 
"More than Rs 130 crore in cash and jewellery has been seized and approximately Rs 2,000 crore of undisclosed income has been admitted by the taxpayers," said the Finance Ministry statement.
 
Detecting serious irregularities beyond the Income Tax Act, the Central Board of Direct Taxes (CBDT) decided to refer such cases to the Enforcement Directorate (ED) and the Central Bureau of Investigation, enabling them to examine the criminal conduct for immediate necessary action, it said. 
 
More than 30 such references have already been made to the ED, and are being sent to the CBI, it addded.
 
The cases referred from the Delhi unit include the Axis Bank, Kashmere Gate in which complicity of officers of the bank in the malpractices was detected, the statement said.
 
"The concerted and coordinated enforcement action of the Income Tax Department, ED and CBI in detecting the malpractices and taking swift action is going to continue in the coming days," it said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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