The apex bank enjoys a hallowed status, is not subject to any external audits, and its officials enjoy a slew of special privileges
Even while the Reserve Bank of India (RBI) protests increased interference and supervision by the Financial Stability & Development Council (FSDC), there may be some serious trouble brewing in its own cadres which could focus much-needed attention to its internal functioning.
As India's monetary authority and banking regulator, RBI enjoys a special status and is not subject to any external audit. This allows it to write in a slew of special privileges for its officials, not to mention lavish expenditure on frequent off-site meetings at luxury resorts. In recent years, there have been even more goodies, because India's position as a growing economic power and major world market has meant more invitations to global conferences and committees and junkets. A recent flashpoint is a decision to apparently hire 200 officers on a contract basis.
Thanks to a standoff with the officers' union (AIRBEA), RBI has not held promotional exams that allow those in the clerical cadre a chance to upgrade themselves to the officers' cadre depriving some deserving candidates of career enhancement.
Interestingly, RBI already has excess 'officers' because of another unusual policy that allows it to promote more people than there are vacancies, if they clear the promotion exams. By its own admission, 3,607 employees have passed such exams in the past three years against only 1,330 vacancies, with the result that it has excess officers.
Being an officer carries prestige and lots of perks. One of these is a hefty petrol allowance, which requires only a 'bogus' declaration, according to a source. Every officer gets 150 litres of petrol a month if he lives within 2 kilometres of the workplace and 250 litres if he lives beyond. Another is an allowance for domestic help for house-cleaning. Both these allowances have been raised significantly, in a recent wage settlement. Other quirky perks include fruit bags (in addition to subsidised lunch) and unlimited mineral water at work and at home (don't RBI officers use water purifiers?) as also unlimited overtime for drivers.
HUFs cannot open a PPF or even a post-office account since May 2005; but people continue to be taken for a ride and the accounts continue to be opened out of ignorance
This is an issue that is several years old, but we revisit it because too many people are still unaware of how the government functions with regard to schemes that use banks and post offices as collection points.
Here is what is happening to a lot of people. A reader, RJ, wrote to us: "I have a Public Provident Fund (PPF) account with State Bank of India (SBI) in the names of two HUFs (Hindu Undivided Family) of which I am the karta. The account has been operative for over 25 years and was renewed in April 2007 for a five-year period. Since then, the Bank accepted the maximum investible amount of Rs70,000 every year until March 2010 and also credited interest on the amount for three years until March 2010. Now, the branch manager says that I cannot get interest as per a government notification issued in May 2005. Why then did the Bank renew my account in 2007 and accept my deposits every year? How do I get justice?"
While this story may sound outrageous, the Reserve Bank of India (RBI) tells us that getting justice may not be so easy. It is, indeed, a fact that HUFs cannot open a PPF or even a post-office account since May 2005; but people continue to be taken for a ride and the accounts continue to be opened out of ignorance. Does that make the bank liable?
According to sources in RBI, it does not. The bank only acts as a collection agent for what is essentially a government scheme and earns a tiny commission for the service rendered. It is the job of the customer to know the rules and regulations. Incidentally, the bank does not get to use the funds or the float on it, so it is not possible to hold it accountable or ask it to pay interest. Bankers also say that after a spate of complaints, the government issued advertisements informing HUFs about the changed rules.
However, the bottom line is that when it comes to government schemes, the banker is only a facilitator and investors need to know the rules. A bit of sage advice from a banker to the thousands of angry customers who have threatened to take SBI to court is: First safeguard your principal by withdrawing the money, even if it is after deduction of interest. Only then, launch a battle. If a lawsuit is filed, it is clear that the Supreme Court will, ultimately, decide whether collecting banks or post offices are supposed to know the rules and are liable to pay interest. Until then, the best course is for such depositors to come together for a legal fight.
MLM company MAXFOREX has changed its name and website to ‘Dream Worldwide’, leaving many of its 'investors' high and dry
In May, Moneylife had reported on how a multi-level marketing (MLM) company was offering 'trading' in foreign exchange through a high-risk investment module.
Maximus Trades Inc (MAXFOREX), a Mauritius-based company, has now closed down its earlier website and opened a business under a new name, 'Dream Worldwide Inc'. The 'investors' who have been duped are now planning to join hands to nail the company.
All the details that MAXFOREX carried on its earlier site (maxforexonline.biz) have been replicated on the new site (dreamworldwide.biz). However, in its new avatar, the company is claiming that it trades in real estate and diamonds - besides forex. All the information that was there on the erstwhile MAXFOREX site - founders, offices and the business model - are the same. Just the moniker has changed.
What could have forced the company to change its name and website all of a sudden? There has been an upsurge in complaints about MAXFOREX all over the Internet, as well as the reports that Moneylife has carried. Even 419scam.org, the site that tracks spam and scams on the Internet, has labelled MAXFOREX as a Ponzi scheme and provided the MLM company's bank account details. According to the website, MAXFOREX had an account (28037304495) with Barclays Bank at Mauritius under the name of Maximus Trade Incorporation.
For both maxforexonline.biz and dreamworldwide.biz, the domain registrar is Ranger Registration (Madeira) LLC. Even the status of both the sites on Who.is is the same - "clientDeleteProhibited, clientRenewProhibited, clientTransferProhibited, clientUpdateProhibited" is what the site throws up.
Another company, Royal Forex Trading Ltd, which claims to offer trading in forex and commodities, has now surfaced. Royal Forex plans to focus only on the US and India. It claims to offer 1% return per day on an 'investment' of $20 to $99 for 200 working days. The higher your 'investment', the more will be your returns (3.5% per day for a plan of $2,000 to $10,000 for 60 working days). In addition, it also offers 'rewards' (mobile phones, cars) on business worth $5,000 and above. However, it also fails to specify or clarify how it manages to offer such returns.