The RBI has clarified that its directive on prohibiting alterations or corrections on cheques is applicable only to cheques cleared under the image-based cheque truncation system
The Reserve Bank of India (RBI) has clarified that its new norms related with alterations or corrections on cheques will be applicable only for cheques cleared under the image-based cheque truncation system (CTS). This will be applicable from 1 December 2010, the RBI said.
In a circular, the central bank said its prescription on prohibiting alterations or corrections on cheques is not applicable to cheques cleared under other clearing arrangements such as magnetic ink character recognition (MICR) clearing, non-MICR clearing, over-the-counter collection (for cash payment) or direct collection of cheques outside the clearing house arrangement.
According to a senior RBI official, it is true that 90% of cheque frauds involve beneficiary changes. A presenting bank has to be 100% sure that it is presenting a bonafide cheque and if it is not satisfied it may not present the same, he added.
The clarification from the central bank will give respite to a majority of bank customers who use the MICR clearing system and save them from the embarrassment of a cheque being returned.
Earlier, the market regulator exonerated NSDL and now SAT wants to erase certain adverse remarks against the depository made by the two-member bench of SEBI
The National Securities Depository Ltd (NSDL) now has a squeaky-clean slate following orders from the Securities Appellate Tribunal (SAT) and market regulator Securities and Exchange Board of India (SEBI) in the initial public offer (IPO) scam. SAT, in its latest order, has asked SEBI to erase certain adverse remarks against NSDL made by the two-member bench appointed by the regulator in relation with the IPO scam of 2003-2005.
Earlier, in February, SEBI exonerated NSDL for the depository's alleged failure in preventing the IPO scam. SAT, in its latest order, said that it is satisfied in the light of the directions issued by SEBI. "NSDL has revised its business rules and put in place additional procedures to deal with the accounts of the beneficial owners in the event of deactivation/termination of a depository participant," the order said.
The two-member SEBI bench comprising G Mohan Gopal, director, National Judicial Academy and former Reserve Bank of India (RBI) deputy governor V Leeladhar, had passed a strongly-worded order against NSDL, directing it to carry out an independent enquiry to establish individual accountability for the failures of NSDL in the IPO scam.
The IPO scam goes back to 2006 when SEBI investigations conducted by then chairman M Damodaran, unearthed that shares reserved for retail investors were illegally acquired by various entities through tens of thousands of fake dematerialised (demat) accounts and fictitious applications. From the facts, it appeared that NSDL was liable for poor oversight that allowed fake demat accounts to be opened. NSDL's then head CB Bhave denied any responsibility for the scam even though the banks that had opened the fake demat accounts were penalised by the RBI.
Based on the prima facie findings, SEBI issued various directions against 82 financiers, 24 key operators, 12 depository participants (DPs) and two depositories. The order also asked NSDL promoters to take all appropriate actions including revamping of management, which clearly has allowed matters to come to such a sorry pass, without further loss of time.
After Mr Bhave took over as SEBI chairman, a two-member bench was constituted to look into the IPO scam as well as the DSQ Software Ltd case.
This was followed by a one-year effort to bury the orders of the two-member bench. Finally, under pressure from a public interest litigation (PIL) filed in the Andhra Pradesh High Court, the SEBI board met and was forced to release the three orders of the bench into the public domain. But the board sought to kill the application of the orders by declaring that two of the orders as void or 'non est' since the bench had gone beyond its brief in criticising the regulator itself.
Dr Gopal had objected to this action taken by SEBI. His reservations were echoed by Justice JS Verma, former Chief Justice of India, who declared that such quasi-judicial orders can only be reviewed and quashed "by a judicial forum with requisite jurisdiction, at the instance of a petitioner with standing to seek relief." Justice Verma is one of the most respected jurists whose opinions are not for sale.
Citing the SAT orders, the SEBI board had said, "In substance, the Hon'ble SAT has held that NSDL cannot be faulted for any lapses or deficiencies on those counts. In view of this finding by Hon'ble SAT in its order and submission made by NSDL as in paragraph 11 above, we do not find it necessary to examine the very same aspects any further and issue any fresh directions."
Earlier, the SEBI board had also sought the legal opinion of C Achuthan, former presiding officer of the Securities and Appellate Tribunal (SAT), in relation to this matter. Dr Gopal had officially pointed out that Mr Achuthan's position was conflicted because he had represented one of the IPO accused (Karvy) in a matter before the Andhra Pradesh High Court. Mr Achuthan is also a director on the NSE board, a SEBI-regulated entity. NSE is the promoter and major shareholder of NSDL.
Shailesh Gandhi, the CIC, estimates that with the digitisation, his office would be saving about 20,000 sheets of paper in the next twelve months
Shailesh Gandhi, the Central Information Commissioner, has changed the image of a typical government office, at least at the Information Commission. Over the past three months, his office has scanned all of its 9,000 files which are now available on the office network for any member of the staff to access.
About two weeks back, Mr Gandhi's office stopped receiving paper and started accepting digital images every day. All new communications come to his office after scanning and converting of papers into a soft or digital copy. Even for emails, the Commission now attaches the email to the appropriate electronic folder instead of printing and keeping a hard copy in the file.
"While I admit that my office is relatively 'young' and most records are less than two years old, I believe that more government offices can move towards making their records electronic," Mr Gandhi said in his blog.
The preamble of the Information Technology Act states that it is an Act to facilitate electronic filing of documents with government agencies. Section 4 of the Act provides legal recognition to electronic records; Section 5 provides legal recognition to digital signatures; and Section 7 states that if a record is to be retained for a particular period of time it would be deemed to have satisfied that rule if it is available in an electronic format. In short, digital record-keeping is definitely the way forward in any office-government or otherwise, says Mr Gandhi.
The Commission created a very simple computer program, which is easily duplicable, to manage the work in the office. The program not only makes all files available to every member of the staff at all times, but it also means that any new action taken on the files gets linked to the original file with the click of a mouse. Only letters, which have to be sent by the office, are printed. Drafts of orders, notices, and other types of communications are reviewed on the computer before printing. Mr Gandhi estimates that his office would be saving about 20,000 sheets of paper in the next twelve months.
He said that his office was able to make the transformation in a very short span of time and with no requirement for any additional budget. "Simple changes can make a big difference-all we need to do to make those simple changes is to set our mind to it. If all government offices go digital, the impact on governance and transparency could be huge. As by-products we could get a reduction of corruption and paper usage," the information commissioner added.