New Delhi: The Planning Commission today said that Rs50,000 crore Infra Debt Fund (IDF) for financing infrastructure projects will become operational by beginning of next fiscal, reports PTI.
A panel constituted by the commission to look into the changes required in the regulatory framework for facilitating the setting of the IDF is expected to give its report by next week.
"If everything goes well, the Infra Debt Fund would be reality by the beginning of the next fiscal," Planning Commission deputy chairman Montek Singh Ahluwalia told reporters here.
He said, "The committee headed by State Bank of India (SBI) chairman O P Bhatt which is looking into the changes required in the regulatory framework for creating IDF would submit its report by next week."
Earlier in June this year, an expert panel headed by HDFC chief Deepak Parekh had recommended setting up of the IDF of Rs50,000 crore for financing projects in this crucial sector.
In its recommendations submitted to the Plan panel, the committee had asked the government to change rules to allow funding by pension and insurance companies.
It had urged the sectoral regulators - Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA), and Pension Fund Regulatory and Development Authority (PFRDA) - to tweak their existing laws to enable market players to use the large amount of untapped insurance and pension funds.
In its report submitted to the commission, the Parekh committee had also suggested that the proposed infrastructure fund with an initial corpus of Rs 50,000 crore be set up as venture capital fund (VCF) to be managed and regulated by SEBI.
For this purpose, SEBI should be asked to amend its guidelines for VCFs to enable investment in the debt market.
Currently, only a part of VCF is allowed to be invested in debt, the panel had said.
The report suggested that insurance regulator IRDA and interim pension watchdog PFRDA be approached to modify the rules to enable these funds to invest in the infra fund.
Besides, the report recommended that foreign insurance, pension and sovereign funds be asked to invest in the proposed infra fund. For this, RBI will have to be approached to create a special window for these kinds of foreign debt with a tenure of 10 years or more.
Also, the multilateral agencies like the World Bank and the Asian Development Bank (ADB) would also be asked to invest in the fund.
At present, there is a debt funding gap of over Rs1.62 lakh crore in infrastructure financing for the current 11th Five Year Plan (2007-12).
When even bank tellers dispensing notes refuse to use counterfeit-currency checking machines to verify their genuineness, whom does the hapless customer turn to? And why are these machines not being manufactured in India?
Readers of Moneylife will be familiar with the series that we recently carried on the convoluted world of counterfeit currency in India, where the victim of the crime is the fall guy. I had suggested in the concluding article in the series (see: http://www.moneylife.in/article/78/7308.html) that prevention is the best part of cure, and if the ATMs in your area are suspect, then use the teller - and get the bank to run the currency notes through their machines before accepting them.
It looks like the rot in the system is even deeper than what I had previously imagined.
I needed a demand draft for a payment of Rs1,000 while in Mumbai recently. Walking over to the Ballard Estate branch of a public sector bank, where I used to have a savings bank account which seems to have vanished (that's another series of articles after some more research, incidentally . . .), I filled up the required DD forms, and with help from the extremely helpful and cooperative staff of what is their marquee branch, was asked to tender the required cash to the receiving teller.
It so happened that I offered two Rs500 notes from the older green-coloured series, part of some currency withdrawn from the same bank's branch near my home a few days ago, as payment. Incidentally, most shopkeepers and taxi-drivers and other people who do not know you will demur from accepting these green Rs500 notes, so they tend to collect in your wallet - which is why I was keen to see the last of them, too. The bank receiving teller also gave me the regulation suspicious look, and asked me if I did not have any other notes - to which I said that I did, but that I chose to pay him with these.
The receiving teller then pulled out what looked like a portable counterfeit currency checking machine, through which he ran these currency notes a few times, before finally accepting them. Despite this, he also made a note on a slip of paper of my name, which he then strapped using a rubber band, along with these notes. So far, nothing extraordinary - this may have been an experience which others have also experienced - and sometimes found themselves saddled with FICN (Fake Indian Currency Notes).
But now comes the interesting part - another person receiving some currency at the next counter, that of the dispensing teller, observed this and requested that the notes he was taking be kindly checked on the same machine. The dispensing teller flatly refused, saying that the machine was not to be used for currency notes being issued by the branch, and then mumbled something to the tune that this was a "personal" machine. Minor argument and shaking of heads later, the other person left, and I hung around making small talk while the DD was being prepared.
The two tellers made a very interesting comment - if they checked every currency note they issued, they would soon have a huge problem on their hands. As a customer, I was supposed to understand and empathise. One or two bad notes for me, too many for them, so.
This is at the Central Bank of India's Ballard Estate branch. Outside their door is India Mint House, headquarters for the India Government Mint, and a stone's throw away are the Reserve Bank of India's headquarters.
There are a few professions where cash is often the standard mode of receiving payments. Middle class like many of us, but over the past few decades, many of them have done well. Sometimes in cash. Often in large amounts. Doctors, dentists, property dealers and some others who we will not wish to name here for legal reasons.
Many of them have now invested in currency counting and FICN detecting machines. It is unclear where many of these machines come from, and their efficacy, but they do seem to work. Prices vary from Rs500 for some sort of a penlight with an LED bulb to Rs30,000-Rs50,000 for bigger and faster machines. Ask for a demo and more details, and you shall be told, "Chinese hai". The machine or the fake note, both of which are available, that is not made clear.
The popular mode seems to be portable machines which can count and check about 100 currency notes in a minute. These machines are apparently available with no questions asked and usually no receipts provided either.
At Palika Bazaar, Ghafar Market and Nehru Place in New Delhi. Certainly elsewhere too, as well as on the Internet.
A friend who is a very senior government officer was taking part in one of those many regional economic intelligence-gathering meetings. The issue of FICN is one of those subjects that come up for repeated serious and multiple discussions, wherein observations, experiences and anecdotes are and were shared. Said friend is currently posted in a State capital and his contribution is that people in his city and the rest of the State are aware of which ATMs of which bank's branch are to be avoided.
This is documented in those meetings, apparently, because of which some specific bank branches have installed machines to detect FICNs. State Bank of India is apparently being proactive here, and those who wish to be safe, ensure withdrawals from there. The grapevine has it that a buzz is generated that a particular consignment of bad currency is being "pushed" through such and such ATMs, and it is wise for those who know to avoid it, and the name of two particular private banks seem to be repeatedly mentioned.
The biggest hurdle for entrepreneurs in India who wish to develop FICN-detecting machines for the domestic "market", is the difficulty in sourcing counterfeit currency for hands-on testing. Legitimately. On a below-the-radar level, it is apparently simple enough - go to any shopkeeper, and you will be able to pick up a few.
But mere possession of such currency is a serious crime. So what do such people do, especially when the hardware and software requirements are not rocket science, and in some cases they are already in all likelihood developing such products for clients abroad? The same clients abroad, incidentally, who would in further likelihood then add mark-ups and provide the same products at multiple times the price to Indian customers.
Your correspondent approached the Reserve Bank of India for responses on this subject - specifically towards the urgent and immediate need for providing FICN detecting tools at teller counters and ATM machines. Potential domestic manufacturers claim that Rs15,000 would be a good price for such a machine mounted onto an ATM, and lesser for standalone models at teller counters.
The first response we got from RBI went like this:
"The High Level Group on Currency Management has recommended in their report (Aug 2009) with regard to ATMs as follows:
'New ATMs installed may be provided with in-built note detectors. Over a period existing ATMs may also be required to have in-built note detectors. We (have) had (a) series of discussions with ATM manufacturers. All of them said such a sensor, though technically feasible, will be expensive. We had asked them to find a low-cost solution. We are awaiting their response.'"
That's a year ago. Nothing since then, it seems.
Moneylife then informed the RBI about domestic low-cost solutions, similar 'Chinese' products at even lower costs, and problems being faced by developers in getting FICN to carry out tests on, and the response we got was:
"From your first mail dated 11th Aug 2010, we got an impression that there are suppliers who have developed low cost (Rs15,000) fake note detecting sensors for ATMs. From your second mail dated 11th Aug 2010, we get the impression that as of now it is only an idea, on (the) drawing board stage and yet to be developed into a product."
How can these suppliers, who range from small entrepreneurs to college students, provide a product if the FICN to test their products on is simply not legitimately available?
And then RBI says that the solution as proposed by their foreign suppliers is "too expensive".
(In the next part of this series, we'll examine what remedial steps can be taken by a bank customer to address the menace of counterfeit currency)
Bhubaneswar: Rejection of an environment clearance to Vedanta's mining project has brought in to focus the high quality bauxite deposits in Orissa, considered to have the fourth largest bauxite reserve in the world, reports PTI.
The total reserves of bauxite in the mineral-rich state are estimated at 1,530 million tonnes, spread over different sectors, industry sources said.
According to conservative estimates, about 20 million tonnes of bauxites are distributed in Keonjhar, Sundergarh and Phulbani districts, they said.
The remaining reserves are under the thick blanket below the thin capping of soil and laterite in Bolangir, Bargarh, Kalahandi, Rayagada and Koraput districts.
There are altogether six leases, four in Keonjhar and Sundergarh producing annually 17,000 tonnes and used in iron and steel making, official sources said.
The other two leases owned by public sector Aluminium behemoth National Aluminium Company (NALCO) in the Panchpatmali deposit of Koraput district produce 2.4 million tonnes.
The state has decided in principle to lease out the bauxite mines to the prospective entrepreneurs through Orissa Mining Corporation (OMC) with the condition that they will set up alumina and aluminium industries in the state.
OMC also entered into an agreement with Utkal Aluminium Ltd for setting up an alumina plant in Rayagada district, official sources said.
However, most of the bauxite deposits are located in tribal-dominated areas, which makes it tough to obtain forest and environment clearance for carrying out mining operations, they said.
The Centre yesterday announced the decision to reject environment clearance to Vedanta's bauxite mining project in Niyamgiri area of Kalahandi district on the ground that there has been serious violation of Environment Protection Act and Forest Conservation and Rights Act.
The Orissa government had signed a memorandum of understanding (MoU) with Vedanta for setting up an integrated Alumina and Aluminium complex along with the associated captive power plant in the state.
A company official said the MoU also included supplying 150 million tonnes of bauxite for Vedanta's alumina refinery at Lanjigarh.
Vedanta is currently operating its alumina refinery with outsourced bauxite.
In view of the hurdles before proposed mining in Niyamgiri, the official said, the state government is actively considering allocation of alternate source of bauxite to its alumina refinery.