Reorganising bank selection advisory panel is a good governance imperative for the RBI!

There is a common misconception that conflict of interest only arises if a person has done something improper. The answer is a big NO! Perception is a very critical aspect to the notion of conflict of interest

In the last few Moneylife articles, we have been talking about the issue of conflict of interest with regard to the recently appointed RBI financial inclusion committee and in this article I focus on the RBI banking selection advisory panel. At the outset, I would like to state that serious conflicts of interests exist because one of the members of the banking selection advisory panel, Dr Nachiket Mor, is also chair of the RBI financial inclusion committee which has two members who have directly applied for the banking licenses. Further, several members of the above mentioned RBI financial inclusion committee have a relationship to these and other banking license applicants. The key relationships have already been highlighted in the previous money life articles and the interested reader may refer to these for understanding the exact nature of the various conflicting relations -  RBI’s New Financial Inclusion Committee: Rife with conflicts of interests,  Does the RBI know how much conflicts of interest it has created? and Why should RBI immediately disband newly appointed Committee on Financial Inclusion?

 

Now, let us focus directly on the banking selection advisory panel which has four members as per RBI’s announcement dated 4th October 2013. The first striking point about this panel is that it has three past regulators and a banker (with significant connections to the private financial sector). It must also be mentioned that two of the regulators retired from their regulatory positions within the last three years or so. Their key inter-relationships and conflicts of interests are listed in Table 1 below:

 

Table 1 : Conflicts of Interests in The 4 Member RBI Banking Selection Advisory Panel

Conflict of Interest Origins in 4 Member RBI Banking Selection Advisory Panel  (Based on Facts Available with Writer and Best Available Judgement of the Writer)

Number of Members of the RBI Banking Selection Advisory Panel Who have This Conflict of Interest

Number of Members in RBI Banking Selection Advisory Panel with a Specific Conflict of Interest as a proportion of Total Committee Members

  1. Direct on-going as well as past relationship with banking license applicants

1

25%

  1. Direct on-going as well as past relationship with institutions that are investees in banking license applicants

1

25%

  1. Direct on-going as well as past relationships with institutions that have a relationship to banking license applicants

2

50%

  1. On-going close interrelationships between panel members in terms of serving on each other’s advisory panels and/or  joint organisation of events in area of financial inclusion and the like

2

50%

  1. Very close personal and professional relationship spanning over 2 decades with serving RBI staff (Governor, Senior management and/or any board member of the RBI)

1

25%

  1. Performing multiple roles at RBI at this very time (including by serving on the banking selection advisory panel), thereby, creating huge opportunities for potential conflicts of interest.

1

25%

It must be remarked that one member of the banking selection advisory panel is at present holding several positions at the RBI: a) Member of RBI’s eastern board; b) Member of RBI’s Central Board; c) Member of RBI’s Financial Inclusion Committee Under Dr K C Chakrabarthy; d) Member of the Research Advisory Committee of CAFRAL, which is completed funded by RBI and located at the RBI; e) Chair of the new RBI Financial inclusion committee announced on September 23rd and f) Member of the Banking Selection Advisory Panel

 

While the above conflicts of interests are general in nature, a second more crucial conflict of interest concerns the existing supervisory process and capacity at RBI and this is enumerated below.

 

There are large industrial business groups among the banking license applicants. And, there has been significant controversy regarding the granting of bank licenses to large industrial business groups for various reasons (this is dealt with in a separate article). And, likewise, there are NBFC and MFIs, which have also applied for the banking licenses and in the last few weeks we have had a lot of suggestions towards award of licenses to ‘small’ banks.

 

Given the above, I see two fundamental judgments to be made by the RBI banking selection advisory panel, while recommending banking licenses:

a) Understand the true capacity of the RBI to appropriately ring fence banking entities of large industrial business groups and supervise them effectively;

b) Analyse the objective ability of the RBI to supervise small banks, with operations and clients in diverse and remote areas.

 

Now, both of the above will require a candid and dispassionate analysis of RBI’s existing processes and its capacity, with regard to supervision of financial conglomerates (which could be considered as somewhat similar in characteristics to banks promoted by large industrial business groups) as well as NBFCs MFIs (which are thought to be akin to small banks). The argument being that if the RBI cannot effectively supervise large financial conglomerates, then, the question of it effectively ring-fencing and supervising banking entities belonging to large industrial business groups may be difficult. And hence, such licenses may not be accorded.

 

Likewise, the implied argument is that if the RBI cannot effectively supervise NBFC MFIs, then its ability to supervise similarly structured small banks (with diverse clients) is also a question mark. This would again result in the committee not recommending small banks from among the pool of applicants

 

Forgetting what I have said so far, read the following quote from a recent International Monetary Fund (IMF) assessment of RBI, as an institution. As the IMFi assessment notes,

 

“...The assessors identified a number of opportunities to better align current supervisory policies and procedures to international best practice. These include suggestions for improved coordination between the central office and the regional offices, increased interaction with auditors and private sector banks, more focused attention to banks’ internal risk-management models, a gradual move to more risk-based supervision and a revision of the RBI rotation policy to foster stronger supervisory expertise.”

 

Therefore, as noted earlier, the banking selection advisory panel would surely have to dispassionately and objectively analyse the capacity and weaknesses in the existing RBI supervision process, with regard to financial conglomerates in order to make a proper judgement on whether (or not) RBI’s strategy of ring-fencing banking entities of large industrial business groups, can be achieved in real time. This needs to be noted with great care!

 

And given the background of the RBI banking selection advisory panel in terms of it having a large number of past regulators as its members, the closeness (and ownership) of some of these regulatory member’s to the RBI’s own (past) supervisory process and the overall conflicts of interests prevalent (as identified earlier), I doubt very much as to whether the present banking selection advisory panel can indeed do an objective job of the same. 

 

This not all.

 

Table 2 provides an overview of the RBI banking selection advisory panel members in terms of their relationship to a specific event – the 2010 AP micro-finance crisis. And as you can see from the table below, three of the four members of the panel, were at some time or the other, associated with institutions involved in the 2010 AP micro-finance crisis. And two of these were regulators who had direct linkages to the (ineffective) regulatory/ supervisory processes that led to questionable decisions on the ground, which, in my opinion, also played a part in exacerbating the 2010 AP micro-finance crisis. Therefore, not to sound like a broken record, but here again, I doubt very much as to whether a proper objective judgement of RBI’s current processes and its capacity to effectively supervise smaller financial institutions can be made by the panel. And unless we have an honest assessment of this, the banking selection advisory panel will not be able to recommend whether (or not) small banks should indeed be licensed by the RBI.

 

Table 2: Relationship of the 4 Member RBI Banking Selection Advisory Panel to

The 2010 AP Micro-Finance Crisis

Other Aspects of RBI Banking

Selection Advisory Panel Member

(Based on Facts Available with Writer and

Best Available Judgement of the Writer)

Number of Members of the RBI Banking Selection Advisory  Who have This Attribute

Number of Members in RBI Banking Selection Advisory Panel with Specific Attribute as a proportion of

Total Panel Members

  1. Occupied a key regulatory position during the 2010 AP micro-finance crisis or just prior to that (adjusted for number of regulators)

2

67%

  1. Tenure as regulator witnessed serious regulatory and supervisory failure, at least in terms of not spotting and acting on governance and related problems with NBFC MFIs associated with the 2010 AP micro-finance crisis. This has been adjusted for number of regulators in the panel, which is three

 

Regulatory/supervisory failure was subsequently vindicated by: a) self-admittance by a regulatory superior (as high as former Governor of RBI, Dr YV Reddy); b) an enquiry ordered by the same regulatory authority (SEBI, in which the concerned member served officially as Chairman or in another capacity); and c) an enquiry ordered by another regulatory authority (IRDA).

2

67%

  1. Dealt closely with institutions that were at the centre of the 2010 AP micro-finance crisis or previous micro-finance crisis like the 2006 AP micro-finance crisis or 2009 Kolar micro-finance crisis. A key point to note is that these crises resulted in large scale exclusion of clients in India

3

75%

 

Now given the above, it is clear that the banking selection advisory panel has members with significant conflicts of interest and therefore, it would appropriate for the RBI to go in for a comprehensive re-organisation of the banking selection advisory panel to exclude members with even the slightest conflict of interest and include those with no apparent conflicts. Also, re-organisation of the panel can be made once the recommendations of the Hon Parliamentary Standing Committee on Finance (PSCF) become available – in fact, media reports suggest that this PSCF report should be available very soon.

 

All these apart, the above discussion raises some very serious issues with regard to conflicts of interests at central banks like the RBI.

 

First, would be worthwhile to know whether any of the above conflicts have been disclosed by (any of the) concerned members and/or recognised officially at the RBI. Indeed, if the RBI had a formal policy on conflicts of interests and also a formal code of conduct for its board and committee members, this should have happened automatically.

 

Second, it would also be interesting to know whether such (conflicts of interests) policies and codes (of conduct) exist at RBI and whether disclosure has happened as per that! If indeed members had disclosed, then, how come these members were appointed to the banking selection advisory panel, ignoring the stated conflicts and disclosures.

 

And without any question, all of this would need to be clarified by the RBI as soon as possible.

 

To summarise, conflicts of interests need to be properly identified and managed at central banks and the Reserve Bank of India cannot be an exception to this very important rule of good governance. If conflict is not recognised promptly and handled wisely in each case, transparency becomes muddied and serious public mistrust may follow. Conflict of interest is thus a problem that attacks the very heart of good governance and needs to be resolved expeditiously!

 

And a caveat is in order here. There is a common misconception that conflict of interest only arises if a person has done something improper. The answer is a big NO! Perception is a very critical aspect to the notion of conflict of interest. It is not sufficient to simply believe or assert that the banking selection advisory panel members will not allow themselves to be influenced in any way by their private interest. They must also be seen to avoid situations where they might be perceived as being influenced by a private interest. Thus, a conflict of interest is not in itself misconduct; however, failing to recognise it or manage it appropriately could, at best, be considered improper or, at worst, be even regarded as potentially unlawful behaviour, depending on the country and context.

 

One final comment I would like to make. Responsiveness, integrity, impartiality, and accountability are four of the key values critical for a central bank like the RBI. And all of these are threatened by conflicts of interest. Thus, the RBI, as the premier institution that governs the financial sector in India, must surely set appropriate standards and benchmarks regarding conflicts of interests and take swift appropriate action, to eliminate them, as and when they become apparent. I am indeed confident that the RBI will act in the best traditions of its great institutional history!



i India: Financial Sector Assessment Program—Detailed Assessments Report on Basel Core Principles for Effective Banking Supervision by IMF Country report, August 2013

 

(Ramesh S Arunachalam has over two decades of strong grass-roots and institutional experience in rural finance, MSME development, agriculture and rural livelihood systems, rural and urban development and urban poverty alleviation across Asia, Africa, North America and Europe. He has worked with national and state governments and multilateral agencies. His book—Indian Microfinance, The Way Forward—is the first authentic compendium on the history of microfinance in India and its possible future.)

 

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COMMENTS

Sucheta Dalal

3 years ago

Actually, in the context of what Ramesh Arunachalam has written and Mr Kini commented. This article that I wrote in 2011 is pertinent

http://www.moneylife.in/article/regulato...

nagesh kini

3 years ago

It has to begin right from the top!
My RTI query on who appoints Directors on the RBI Central Board has been shunted between RBI and MOF.
There is a Director for 17 long years!
Why appoint the Nachiket Mor Committee when Damodaran and Justice Balakrishnan equally "High Powered" Committees have dealt with almost identical issues earlier.
They appoint the same names, are there no other competent experts outside the same charmed circle to go on Bharat Darshans?

REPLY

Sucheta Dalal

In Reply to nagesh kini 3 years ago

It is now over 19 years and will soon be 20!!

But nobody in India wants to take this issues us with any seriousness. In fact, if you dare to raise common-sense principles of good governance it is viewed as personal agenda or enmity. In fact, I have very high regard for Mr Y H Malegam. But how, by any standards is it okay for him to be on the board for 20 years?
He is himself on various governance committees including the FSLRC. Shouldn't he himself step down sometime?
Do read: http://www.moneylife.in/article/regulato...

Ramesh S Arunachalam

In Reply to nagesh kini 3 years ago

Very interesting sir! Old Boys network I guess! I knew that there was some one servging his 4th term but not aware of 17 years. That is just over 1/3rd my age sir! I in fact raised the question of whether we cannot find 12 unrelated competent people from a population of 120 crores. Pls see this article sir and thanks again for your insightful comments. Will provide a detailed reply on legal issues related to your comment above also sir

http://www.moneylife.in/article/why-shou...

nagesh kini

In Reply to Ramesh S Arunachalam 3 years ago

Both Sucheta and I are aware of the name of the Director for 17years!

Ramesh S Arunachalam

In Reply to nagesh kini 3 years ago

I think I can guess sir! But I think you have a raised a very important issue and this pertains to the entire board.

Who can become a member of RBI board?
Who should be allowed to become a member of RBI board and the like
and so on.

Thanks sir!

Ramesh S Arunachalam

3 years ago

The problem with corporate governance is that it needs to be practiced. That is where many institutions/organisations fall short but I am really hopeful that the RBI will walk the talk

Yerram Raju Behara

3 years ago

Vested interests and hidden agenda in the appointment of either Working Groups or Committees or Board positions is the root cause of improper regulation and good governance requires their avoidance. This would require proper understanding and appreciation of the philosophy of corporate governance more than the rules. In regulatory institutions generally it is the top four or five on the Supervisory Board who take a call on such appointments. They have all ascended to the position because of their proven knowledge and skills and their capability to influence the regulatory system to deliver the best for financial stability and to arrest systemic risks. They must have at that age and service developed some mental blocks and some inflexibility, which is likely to lead to the type of risks that the regulator got into now and these are absolutely avoidable.

Aptech buys back shares from single institution, sidelining retail investors

Aptech, which has Rakesh Jhunjhunwala as one of its promoters, has bought back one third of its minimum buy back value from a single institution and not from retail investors. Are SEBI buyback norms anti-investor?

On 11 October 2013, a big bulk trade took place on BSE, which raised some eyebrows. Aptech bought back 15.5 lakh shares at a rate of Rs69.49 per share, which pegs the value of the transaction at Rs10.77 crore. What is pertinent is that it bought 15.5 lakh shares from a single buyer—Khandwala Trade Link Company—which is nearly one third of the minimum stipulated value it intends to buy back. Why are retail investors again being sidelined in favour of an institutional seller? Will the Securities Exchange Board of India (SEBI) do anything about this? This isn’t the first time this sort of thing has happened.
 

High profile investor, Rakesh Jhunjhunwala, is one of the promoters of Aptech. A similar kind of transaction took place earlier in June, albeit with a different company—Zen Technologies—where the latter bought back 8.9 lakh shares out of Jhunjhunwala’s 9 lakh shares, at Rs70 per share, leaving with just over 6 lakh shares to buyback from the public. It intended to buyback 16 lakh shares. Retail investors were ignored while just one investor, Jhunjhunwala, got favourable terms. We had covered this story here.
 

In this case, Aptech (read: Jhunjhunwala) is the buyer.
 

According to a regulatory filing by the company on 9 July 2013, Aptech intends to buy back equity shares at a price not exceeding Rs82, for an aggregate amount up to but not exceeding Rs64.65 crore. The buyback is expected to be completed by 23 January 2014.
 

Quoting Ninad Karpe, CEO & managing director, Aptech, from Business Standard, on the reasons for the buyback: “The board felt optimistic about our future and we have about Rs100 crore lying with us. We are a zero debt company so we thought we would use the surplus cash.”
 

According to BSE filings, Rakesh Jhunjhunwala holds 8.85% of the Aptech’s shares outstanding while his firm Rare Enterprises owns 21.63% of the shares outstanding. Rekha Jhunjhunwala holds 4.48% of the shares outstanding.
 

Aptech closed Monday 1.5% up at Rs69.55 on the BSE, while the benchmark Sensex ended the day marginally higher at 20,607.

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Marketing and advertising blitzkrieg of biometric techies and supporters -Part 4

Indians are accustomed to advertising and falsehoods. But when it comes to advertising by biometric technology companies, uninformed citizens and even the non-Congress leaders are willing to trust even the most untrustworthy of claims

Among other things, will the general elections of 2014 reveal whether or not Indians are willing to be guinea pigs for biometric technology companies? It will disclose the identities of those political parties who take donations from such companies or are beneficiaries or their shareholders.

 

Biometric identification will impact human civilization in a far deeper way than printing press, industrial revolution, light bulb, Internet and personal computers did. The introduction of these automatic identification technologies marks the beginning of a world where everything and every place gets imbedded with such spying identifiers.

 

More than four years have passed but opposition parties in particular and non-Congress parties in general are yet to consolidate their considered position vis-à-vis biometric data collection in the name of e-governance initiative of Indian National Congress led Government. Meanwhile, Nandan Nilekani, the chairman of Unique Identification Authority of India (UIDAI) under the Planning Commission boasts, “We have made India the tech capital of biometrics” He has disclosed, “We felt speed was strategic. Doing, and scaling things quickly, was critical. If you move very quickly, it doesn’t give the opposition the time to consolidate.”

 

Strategically, state governments led by opposition leaders like Nitish Kumar and Narendra Modi too were conned into signing memorandum of understanding (MoU) with UIDAI before August 2010. Strangely, Modi who was categorically opposed to collection of biometric data submitted himself for 12- digit biometric unique identification (UID) number and launched it in Gujarat. Due to paucity of information even Admiral Nirmal Varma, Chief of Naval Staff and His Holiness Dalai Lama have already enrolled for UID number, which is linked to National Population Register (NPR), without the passage of Privacy Bill. It is incomprehensible as to who compelled Dalai Lama to enroll for it.

 

In a manifest case of inconsistency even Yashwant Sinha headed Parliamentary Committee on Finance was conned into recommending that the data already collected by UIDAI be transferred to the NPR after questioning the power of the union government to collect biometric data. The 48-page Report of Parliamentary Standing Committee (PSC) on Finance submitted to both the Houses of Parliament reads (in the section on Observations/Recommendations): “The collection of biometric information and its linkage with personal information without amendment to the Citizenship Act 1955 as well as the Citizenship (Registration of Citizens and Issue of National Identity Cards) Rules 2003, appears to be beyond the scope of subordinate legislation, which needs to be examined in detail by Parliament.” The Parliamentary Committee did not realise that both the Centralized Identities Register (CIDR) of UID number and UID number generating NPR is one and the same as per the terms of reference of the UIDAI provided in the Planning Commission’s notification dated 28 January 2009.

 

NPR, CIDR and National DNA data bank projects are going to do almost exactly the same thing, which the predecessors of Adolf Hitler did, else how is it that Germany always had the lists of Jewish names even prior to the arrival of the Nazis? The Nazis got these lists with the help of IBM, which was in the 'census' business, including racial census that entailed not only counting the Jews but also identifying them. At the US Holocaust Museum in Washington, DC, there is an exhibit of an IBM Hollerith D-11 card sorting machine that was responsible for organising the census of 1933 that first identified the Jews. IBM has not disputed its involvement in it.

 

Nilekani’s book Imagining India describes the ‘Dividends of an autocracy versus a Democracy’ and contends that “In terms of implementing policies that are good for you, whether you like it or not, autocratic regimes are better than democracies”.

 

As part of World Bank's Tranformational Government initiative, the core idea is to ensure convergence of all the residents and institutions underway through Project UID. This is a Silicon Valley initiative (dominated by Biometric technology companies) passing off as “Planning Commission initiative” without consultation at district and panchayat level and within the political parties to create a central database of residents and generate a unique identification number for all such residents which is proposed to be “used as the basis for identifying and authenticating a person's entitlement to government services and benefits”. This initiative is being steered by the Department of Information Technology (as the Line Ministry) through National Informatics Centre Services Inc/ National Informatics Centre (NIC), as the technical solution provider and a consultant for “linking of existing databases, as well as providing for future additions, by the user agencies.” This entails tracking and profiling residents electronically through some 53 departments of the Government of India, 35 State/UT Secretariats and 603 District Collectorates. NIC was formed in 1975.

 

These initiatives are sub-sets of the universal set called Public Information Infrastructure and Innovations (PIII) for a National Knowledge Network that is being pursued by Sam Pitroda who is another Advisor to the Prime Minister in the rank of a Cabinet Minister without oath of office and secrecy. PIII reveals the plot emphasizing digital network to process all kinds of information at all levels saying, “For government, PII is very important to first identify all beneficiaries, essentially people. We also at the same time need to identify all our physical assets all over the country, like primary schools, railway stations, hospitals. Then, we also need to tag all our programmes-and government typically would have hundreds of programmes for public delivery systems. Once you tag people, places, and programmes, then it is easier to really organise information for delivering public services. Hopefully, with new focus on PIII, where we could essentially tag people, tag places, tag programmes, we will be able to structure delivery systems to get a lot better in terms of productivity, efficiency and reduced cost.  The starting point for this nationwide network of fibre optics, wireless systems to connect 2.50 lakh Panchayats all over the country, especially in rural areas, where ultimately, information data gathering would begin. This is where beneficiaries are.”

 

All this information will be in the hands of a few ‘trustworthy’ people in the government and few select ‘patriotic’ companies. Such a situation is fraught with both unintended and intended consequences impacting monetary and non-monetary aspects of citizens’ life. It may be noted that the Land Titling Bill, 2011 makes a provision for linking UID Number with property as per its Section 10 and Section 36.

The gullibility of the non-Congress parties to these initiatives is intriguing given the fact that Government has admitted, “There is no data protection statute in the country.”

 

While UIDAI and the Indian National Congress-led Government have been misleading the citizens/residents and the media about the UID Number scheme being voluntary, the ‘Legal Framework For Mandatory Electronic Delivery of Services’ of Union Ministry of Communication and Information Technology, refers to “UIDAI – UID based authentication for services” as an enabler, thus making it compulsory.

 

Initially, it appeared puzzling as to why it was taking so long for UIDAI and its initiatives to get legislative sanction after Parliamentary Standing on Finance disapproved of The National Identification Authority of India Bill 2010 and its project on several counts. But this puzzle got solved on 10 October 2013, when Nilekani told people of Bangalore’s Koramangala, his potential political constituency for 2014 elections:

 

See, the legislative sanction is not for Aadhaar. The government has ample legal opinion to say that they can do Aadhaar without legislative backing. The purpose of the law is to create a regulatory agency to manage the use of it and to manage penalties and fees […] It’s a common thing for the government to start an activity, and then pass a law because…Parliament and all that, so there’s nothing that prevents us from doing this, except that in the long run we want a regulatory status for autonomy purposes and to manage this whole thing. So the law will come.”

 

His ministerial statement about ‘Parliament and all that’ makes a mockery of Parliament, which has been subjugated by keeping Secretary Generals of both Rajya Sabha and Lok Sabha on contract.

 

But it is inexplicable as to how 30 State Governments signed MoUs with UIDAI before August 2010 without realizing that it is a threat to the constitution as it erodes State’s autonomy for good. This is revealed from a presentation given by Nilekani to the Parliamentary Standing Committee on Finance on 4 August 2010 even before the Bill was referred to it in December 2010.

 

When it is apparent for the Indian National Congress led Government that Supreme Court is likely to issue an adverse order on 22nd October after the Court on 8th October refused to modify its 23rd September order on the application of the government, the Union Cabinet approved a Bill on that very day to give statutory status to the UIDAI which provides biometric identifier numbers.

 

The Bill is likely to be re-introduced in the winter session of parliament during November-December. Its earlier version was introduced in the Rajya Sabha in December 2010 but was trashed by the Parliamentary Standing Committee on Finance. Section 57 of the earlier Bill provided that UIDAI’s acts of omission and commission since 28 January 2009 be rubber stamped by the Parliament to underline that whatever it did had the consent of the Parliament. It remains to be seen whether the same has been retained by the Union Cabinet’s new version of the Bill. Union Cabinet’s approval of the Bill is likely to meet the same fate as its approval of the Bill to protect legislators from disqualification even after conviction in a criminal case.

 

Supreme Court is all set to pass a landmark ruling on the legality of UIDAI and its biometric collection akin to the judgment of 10 July 2013 that had struck down the legal provision that protects a lawmaker from disqualification even after conviction. The notification of Planning Commission dated 28 January 2009 is likely to meet the same as the ordinance that was meant to protect the disqualification of legislators.

 

All the political parties other than Congress seem to be deaf when it is admitted by Nilekani that “biometrics as a tool of surveillance”. He says, “So, like, you go to America today, you land at JFK airport and they take your fingerprint and your [iris scan]…and they do some…funny thing with it. So they have looked at biometrics as a tool of surveillance and…and all that. In our case, we said, let us use this technology in a very different way. We’ll use this technology to give a unique identity to everyone. And that is what we do.”

 

Admittedly, the biometric tool is for surveillance but the gullible seem to believe even what is unbelievable-it is for delivery of identity proof and social entitlements. Although Indians are accustomed to advertising and falsehoods purveyed by them but when it comes to advertising by biometric technology companies uninformed citizens and the non-Congress leaders are willing to trust even the most untrustworthy of claims. Nilekani, the vendor, has been on record for stating that success or failure of biometric identifier is dependent on marketing alone. Isn’t Nilekani a member of the Congress?

 

All the parties other than the Congress have a political duty to ensure that the enactment of Privacy Bill, 2011 precedes initiatives like Public Information Infrastructure, NPR and CIDR else the very purpose of the proposed legislation is defeated. Before the creation of Data Protection Authority of India (DPAI) as envisaged under Section 49 of the Privacy Bill and Central Electronic Services Delivery Commission (CESDC) under Section 8 of the Electronic Delivery of Services Bill, 2011 with proven impeccable judicial competence, the implementation of all biometric data collection related programs must be stopped both in private as well as in the government.

 

The 15th Lok Sabha in particular witnessed the wanton autocracy of the ruling party. In her address to both the Houses of Parliament, Pratibha Patil, the President, on 4 June 2009, said, “The Unique Identity Card scheme for each citizen will be implemented in three years overseen by an Empowered Group. This would serve the purpose of identification for development programmes and security”.  The President disclosed that UID is meant for “security” purpose. It is something, which has not been disclosed by Nilekani. She also revealed that this is meant for “each citizen” even as the Government misled saying that it is meant only for usual residents. In an illustration of how ignorance rules the roost in the Congress led Government even the President was not informed that UID is a biometric identifier number and not a card. The President had informed that it will be implemented in three years. If that was the case why was Nilekani given tenure of five years since July 2009? By now it is clear that the Empowered Group of Ministers (EGoM) that supervised  UID initiative has attempted to make legislatures irrelevant and powerless in due course.

   

On 21 February 2013, in his address to both the Houses of Parliament, Pranab Mukherjee, the President said, “An important initiative that my Government has taken recently is the rollout of the Direct Benefits Transfer system. This would enable Government sponsored benefits such as scholarships, pensions and maternity benefits to flow directly into the accounts of beneficiaries, who can access them using their Aadhaar number. In due course, the Direct Benefits Transfer System will also cover wages and subsidies on food and LPG. This system will help cut down leakages, bring millions of people into the financial system and lead to better targeting of beneficiaries. It will be a trend-setter in the use of modern technology to bring benefits to our poorest citizens, especially in rural areas. However, the Direct Benefits Transfer System will not be a substitute for public services and will be complementary to the Public Distribution System.” The Supreme Court has put a stay on this illegitimate initiative.

 

Hasn’t the Congress become a marketing wing of ‘foreign’ biometric technology companies? How does one explain the ID Limelight Award given to Nilekani at the ID WORLD International Congress, 2010 in Milan, Italy on 16 November 2010 during the Conference sponsored by AB Notes, the key sponsor of the ID Congress and Safran Morpho (Safran group), a French multinational corporation? The award was given within less than one month of the launch of biometric UID/Aadhaar number by Sonia Gandhi and Manmohan Singh on 29 September 2010. Nilekani joined UIDAI in July 2009 and got the award within 14 months. What miracle did he perform in such short span? How will the Congress justify the contract awarded by Nilekani to Safran’s subsidiary, Sagem Morpho Security Pvt Ltd for the purchase of Biometric Authentication Devices on 2 February 2011 after getting the ID Limelight award from them?

 

Non-Congress parties who seek votes against the Sonia Gandhi led (well indirectly) Government must be made to declare that they will abandon biometric data collection the way it has been done in UK, US, France, China and Australia. There is a compelling logic for the voters to reject those parties, which implicitly or explicitly support tracking, profiling, databasing and mortgaging of citizens’ rights and their sovereignty under the dictates of their donors and non-state actors.    

 

You may also want to read…

 

Why biometric identification of citizens must be resisted? Part I

 

Biometric identification is modern day enslavement -Part II

 

Biometric profiling, including DNA, is dehumanising -Part III

 

(Gopal Krishna is member of Citizens Forum for Civil Liberties (CFCL), which is campaigning against surveillance technologies since 2010)

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COMMENTS

Ravi S

3 years ago

Aadhaar to provide social security benefits:

Aadhaar-platform is aimed at providing social security benefits / subsidies based on eligibility thru direct benefit transfer. It provides access and options to rural and poor people. It helps bring transparency and eliminate corruption, leakage and inefficiency.
The following table shows financial size of the social security benefits / subsidies funded by the Union government of India. The following data does not cover other programs operated by various State governments:


Social Security Budget 2013-14 (in Billion Rupee)

Pan India Total Subsidy for FY-2013-14 (approx) 3,000 billion
Pan India Food Security (PDS) (subsidy) 1,250 billion
Pan India Petroleum (subsidy) 970 billion
Rural Fertilizer (subsidy) 660 billion
Rural NREGA (non-subsidy) 330 billion
Rural Child Development (ICDS) (non-subsidy) 177 billion
Rural Drinking water and sanitation (non-subsidy) 152 billion
Rural Indira Awaas Yojana (IAY) (non-subsidy) 151 billion
Rural Maternal and child malnutrition (non-subsidy) 3 billion

REPLY

Mumbai One

In Reply to Ravi S 3 years ago

Well...well...well!
Looks like the PR of UIDAI ( or pvt contractor, who may have suffered from such articles) is on a big HIT job today.

Anyway...just give answers to two simple questions...
1. Who owns the UID database? Is it the Indian govt or private agencies/firms?
2. Which is the law that regulates the collection of biometric data, and Aadhaar itself? Don't hide behind the lapsed executive order as any such thing become irrelevant after six months.

All this information is being collected for sale to the corporate !

Who will then squeeze the pulp out of us to the very skin and then sell us even our air and the water !

BTW...Is Aadhaar a subsidy card?

Ravi S

3 years ago

Who is afraid of Aadhaar & Why?

As the public databases are getting inter-linked one by one thru Aadhaar Number in various States (particularly Delhi, Maharashtra, Andhra), we see the following effects:
1. Middlemen & Officials are finding difficult to continue with corruption in public welfare pensions, scholarships, public health, NREGA, subsidy on PDS Ration, Kerosene, LPG etc.
2. Ineligible, duplicate and fictitious beneficiaries are getting eliminated from public welfare pensions, scholarships, public health, NREGA, subsidy on PDS Ration, Kerosene, LPG etc.
3. Corrupts will find difficult to buy & sell Benami land & building (i.e.under fictitious name).
4. Corrupts will find difficult to open & operate Benami companies for money-laundering.
5. Corrupts will find difficult to open & operate Benami bank accounts for keeping black-money.
6. Tax-evaders will find difficult to evade taxes.
7. Impersonation & proxy will be difficult to commit.
8. Criminals & Terrorists will get detected and tracked thru inter-linked databases of mobile phone, bank account, travel documents etc.
9. Illegal Immigrants will get detected and tracked thru inter-linked databases of mobile phone, bank account, travel documents etc. They will have no place to hide on Indian soil.
10. It will get difficult for Criminals to hide as records are getting accessible to Police from any State of India.
11. It will get difficult to obtain another new Driving License and Arms License from another State once it got impounded.
12. Fraudsters will not be able to steal Provident Fund money.
13. Onion Hoarders will get tracked easily.
14. Dummy candidates will not be able to write competitive exams for others for the sake of money.
15. Ineligible people will not be able to misuse the certificates of income, domicile, education degrees and caste to deprive the eligible people.

REPLY

Mumbai One

In Reply to Ravi S 3 years ago

Well...well...well!
Looks like the PR of UIDAI ( or pvt contractor, who may have suffered from such articles) is on a big HIT job today.

Anyway...just give answers to two simple questions...
1. Who owns the UID database? Is it the Indian govt or private agencies/firms?
2. Which is the law that regulates the collection of biometric data, and Aadhaar itself? Don't hide behind the lapsed executive order as any such thing become irrelevant after six months.

All this information is being collected for sale to the corporate !

Who will then squeeze the pulp out of us to the very skin and then sell us even our air and the water !

BTW...Is Aadhaar a subsidy card?

Ravi S

3 years ago

Aadhaar registration collects biometric data and bare minimum information (proof of identity, age, and residence) through enrollment form. Peruse the Enrollment-Form with data fields on page-1 and instructions on page-2. No profiling information is collected, like religion, caste, income, property-holding, education etc.

Privacy issues and risks equally apply to information and data (with or without biometrics) provided by people to census office, tax office, passport office, driving license, vehicle registration, land and building registration, registration of birth, marriage and death, employers (current, past and prospective), banks, credit card companies, insurance companies, telephone service provider, television service provider, internet service provider, internet services (email, video, social media, search engine, chat, voice, file-storage and transfer etc.), registration at school/college, marriage bureaus, post-office and courier services, hospital registration and medical records, visa of US and UK etc.

REPLY

Mumbai One

In Reply to Ravi S 3 years ago

Well...well...well!
Looks like the PR of UIDAI ( or pvt contractor, who may have suffered from such articles) is on a big HIT job today.

Anyway...just give answers to two simple questions...
1. Who owns the UID database? Is it the Indian govt or private agencies/firms?
2. Which is the law that regulates the collection of biometric data, and Aadhaar itself? Don't hide behind the lapsed executive order as any such thing become irrelevant after six months.

All this information is being collected for sale to the corporate !

Who will then squeeze the pulp out of us to the very skin and then sell us even our air and the water !

BTW...Is Aadhaar a subsidy card?

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