Money & Banking
SBI blocks over half million debit cards after security risk
Following a suspected security breach, the State Bank Of India (SBI) has blocked more than 600,000 debit cards of its customers and will issue fresh cards to them, official sources said here on Wednesday.
The malware-related security breach was reportedly detected in the non-SBI ATM network and the move is intended to ensure that customer's confidential personal data is not compromised while swiping.
Confirming, a SBI spokesperson said that card network companies NPCI, MasterCard and Visa had informed various banks in India about a potential risk to some cards in India "owing to a data breach".
"Accordingly, SBI has taken precautionary measures and have blocked cards of certain customers identified by the networks," the spokesperson said, without revealing the exact number of customers who would be affected.
The SBI emphasised that its own systems have absolutely not been compromised and existing cardholders are not at any risk and can continue to use their cards as usual.
Meanwhile, SBI will issue new cards free of cost to the affected customers in the incidents affecting the cards industry.
According to banking circles, several other banks have also experienced similar problems as a few ATMs have been hit by a malware which has a high potential to compromise customers data.
Official figures indicate that SBI has over 20 crore active debit cards, besides another 4.75 crore of its associate banks.
Some private banks are conducting security review by experts of its ATM networks to pre-empt any type of breaches.
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.


In the investment business, nothing really changes

Capital Markets are reformers. As more and more people realise it, the game changes. If I go back in time till the early nineties, valuations were very moderate. Interest rates were in their mid to high teens. And given licensing and corruption, company growth rates were modest. We also had a set of archaic rules where even a promoter could pay himself a salary that was limited by law. Our economy had the proverbial “Hindu” rate of growth. Agriculture was two thirds of the economy. Services were not an officially recognized sector to make a dent.


This naturally meant that there was a big incentive for a promoter to siphon off money from the company. Stock markets were so archaic that a government babu who worked on a book value formula fixed the maximum retail price (MRP) of a share. Thus, a good company had no incentive to issue shares. Many companies got listed merely for tax reasons. Shares in a private limited company were subjected to ‘wealth’ tax whereas shares in a listed company were not. So many good companies got listed. However, they made sure that application forms were distributed to select groups. Thus, we see that many promoters had holdings between 50% and 90% or more.


This sarakari babu also helped in creating immense wealth when he forced companies like Colgate or Lever to issue shares to Indian public based on their formula. If you got 100 shares of Colgate Palmolive at the issue price of Rs26 (face value Rs10) in 1978 in an initial public offering (IPO) that was like the Sikkim Lottery. In the first two years, you would have got dividends and bonuses that would have made the shares free and by now, you would perhaps be owning close to a lakh shares! That is, provided you did not sell out. Hundreds of similar ‘investors’ probably held on, but there were thousands who sold out too soon. Very few investors actually followed the secondary markets and made it big.


Promoter wealth creation had to depend more on siphoning money out of the company rather than by building wealth with the company. The cruel tax structure plus the wretched state of the capital markets led to this promoter behaviour. Greed is dormant in all humans. Capital markets brought this alive.


Then came liberalization. And the abolishment of the MRP system for share issuances led to a new paradigm. In trooped the institutional investors with their knowledge about valuation, and research reports. A liberalised economy brought in with it a flood of capital that also structurally brought down the interest rates. And the government also removed irritants like ceiling on management salaries. 


Now, the promoter started to think differently. He realised that a rupee of additional earnings per share (EPS) meant crores added to his tax-free wealth. So, stealing from the company was not as remunerative. Of course, there are many whose deoxyribonucleic acid (DNA) cannot change. The next generation is as smart or smarter than their parents. They also have the advantage of an open economy and knowledge about capital markets. They know that it is important to show as much earnings as possible, so that the share prices remain high. And yes, one can play games with shares. Private placements, qualified institutional placement (QIP) issuances, and non-disclosure of promoter holdings in full are part of a new game.


The present generation is clued in on the capital markets. So if you think the DNA has changed, think again. It does not. The gene is the same, but the manifestations are different. The entrepreneur dresses up his business to present a façade of attractiveness.


I now see a breed of young investors falling easy prey. The young investor is brash and their crowd is large enough to create a short-term ‘self-fulfilling’ prophecies when it comes to share prices of small companies. Gen-next is sharp. They know the key to riches lies in the capital markets. And they have ready accomplice - investment bankers hungry for fees, institutional investors with other peoples’ money and brokers who know how to lure investors to stocks, no matter how bad. The stock markets are a magnet that draws every participant in to its folds.


As a fly on the wall, there are a few things that strike me. One is that the entrepreneur is as sharp as he was. No one can mess with him. Investor is more aggressive, but more gullible. The regulator has left the field open. Like the Keystone Cops, they will provide the laughs in the end.


Let me close this out with the story of a commodity-based company from Western India. In the 80s and 90s, the earnings used to stagnate. The promoter did not like paying excise duties so most sales proceeds used to be pocketed. Earnings would always disappoint. Today, newspapers talk about ‘re-rating of the company. The second generation is in control. They have spared no effort to shore up the earnings. And now they spew management jargons. They are now considered as a ‘retail’ brand. Over the decades, public awareness of the brand has been high. But now, the analysts and fund managers are becoming aware of this brand. They believe that the ‘brand’ getting more reach because of advertising campaigns. The analysts, if they go beyond their top line and bottom line growth, will find out the true growth story. However, they are now busy planning their investment in a QIP. Once the QIP happens, the cash will go out of the company and then the stock would perhaps become a ‘bargain’.  Information age? You decide for yourself. Yes, you get a lot of information. But that one piece of right information will not come your way. You have to go dig for it.



Anand Chandramouli

3 days ago

Sir, A good chronicle of the last 50 year capital market developments, and thanks for the timely red flag. I request shrewd observers like yourself to reconsider usage of vacuous expressions like "hindu rate of growth", which is nothing but terminological terrorism (thanks to Prof. R. Vaidyanathan, IIMB for this expression)! Please read Prof. Angus Maddison's work to understand the true economic history of India! You can at best label the post independence, slow growth era as 'socialist rate of growth', for the simple reason the we the same people, are growing consistently @ 6-7% post 1990-91 liberalization policies!

Arunkumar A Vijayan

4 days ago

Sir, wonderful article. It would be very helpful if u could provide more clues about the company talked in the article.

padmashri15 V.

5 days ago

so crisp !! Thanks Sir.

Algo trading allegation: NSE appoints Deloitte to conduct forensic audit, says report
The National Stock Exchange (NSE) has appointed Deloitte India to conduct a forensic audit of its algo trading system and examine allegations of unfair access to some brokers in algorithmic trading, says a report.
Quoting a spokesperson of NSE, a report from Live Mint  says, “Deloitte has been appointed, NSE will adhere to Securities and Exchange Board of India (SEBI) directions”. 
This appointment by NSE follows an order from the market regulator to NSE Chairman Ashok Chawla. The letter sent by SEBI on 9 September 2016, asked NSE to "immediately initiate an independent examination (including forensic investigation by an external agency) of all the concerns highlighted by the SEBI expert committee in its report alleging lack of process that allowed this to happen and collusion if any and fix accountability for the aforesaid breaches covering NSE and stock brokers, vendors and outsourced entities involved in the issue.” (Read: SEBI Finally Cracks down on NSE’s Suspect Algo Trading. What does it mean? )
Apart from a forensic investigation, the most significant punitive aspect of SEBI’s directive is that all revenue accruing from its co-location facilities, including from fibre connectivity between brokers’ co-location facilities and their offices, must be paid into an escrow account. The NSE has been asked to get all concerns expressed by the committee addressed, and take necessary action, within three months. 
According to the newspaper report, the forensic audit by Deloitte would cover NSE's co-location facility, algorithmic trading platform, brokers and vendors who access or are connected with NSE’s co-location facility. It will also examine allegations of collusion between NSE officials, vendors and brokers and gather evidence if any violations are found, two of the people told Live Mint.
“Based on the forensic audit NSE would examine its systems, take corrective action and submit its final report to SEBI,” the report said quoting a person familiar with the development who spoke with Live Mint on condition of anonymity. 
As per the report, the forensic audit would examine if certain brokers got unfair access or were able to manipulate NSE’s existing system to get preferential access. Quoting a person familiar with the development, the report says, “As part of the forensic audit or fact-finding exercise, Deloitte would be examining the trade data, time stamps and verifying it against the broker code to gauge whether certain brokers got unfair preferential access”.
In April 2016, a Bloomberg report said that the NSE planned to challenge SEBI’s findings and insisted that there was no wrongdoing at all. The report also quoted anonymous sources connected with the NSE on its stand that the committee had, “simply repeated allegations made by an unidentified whistle-blower without doing a thorough investigation.” This time, however, the NSE appears to follow SEBI’s directive by appointing Deloitte for forensic audit.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)