The LPG Mafia has made My country a V...

The LPG Mafia has made My country a Valley of Death! CHRONY, CASINO and STARVATION Economy Sustained to Kill its Majority People!

Troubled Galaxy Destroyed Dreams: Chapter 111

 

Palash Biswas

 

Obama opts for wisdom of establishment advisers
The Associated Press - 1 hour ago
WASHINGTON (AP) - Barack Obama's campaign credo: Change is good. President-elect Barack Obama's credo: When it comes to war and peace, maybe wisdom is better.
Obama Plans to Retain Gates at Defense Department New York Times
US media: Gates to stay in Pentagon, Hillary nomination "done deal" Xinhua
RadioFreeEurope/RadioLiberty - Press Trust of India - Sydney Morning Herald - The Australian
all 1,657 news articles »

Fuel price cut: A political decision?
Moneycontrol.com - 2 hours ago
At the current level of crude, oil marketing companies (OMCs) are making a profit of just over Rs 8 for every litre of petrol sold and 65 paise profit for every litre of diesel sold.
UPA divided over fuel price cuts? NDTV.com
Murli Deora says he didn't make oil price cut remarks knowingly Economic Times
IBNLive.com - Press Trust of India - Express Buzz - Business Standard
all 253 news articles »

Centre will fully support ISRO's manned moon mission: Antony
Press Trust of India - 3 hours ago
Thiruvananthapuram, Nov 26 (PTI) Centre would extend its full support to ISRO's proposed manned moon mission, Defence Minister AK Antony said here today.
ISRO feels the heat as Chandrayaan 1's temperature rises domain-B
Chandrayaan working normally: ISRO Hindu Business Line
BBC News - Hindu - IT Examiner - IBNLive.com
all 36 news articles »

Integrated posts to be set up along Indo-Nepal border: Pranab
Hindu - 5 hours ago
Raxaul, Bihar (PTI): In a bid to strengthen security along the porous Indo-Nepal border, four integrated checkposts would be set up in Bihar and the landlocked Himalayan country, External Affairs Minister Pranab Mukherjee said in Raxaul on Wednesday.
Buddha lauds Pranab's initiative in setting up Muslim varsity Press Trust of India
New Indo-Nepal extradition treaty soon Times of India
Hindustan Times - Economic Times - Business Standard - Indian Express
all 193 news articles »  ?????? ??? »

ICICI bank's recovery agents drive man to suicideThe 38-year-old was being repeatedly contacted by... (more)

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To tackle Maoists in Lalgarh, special force to be upgraded

Express News Service
Posted: Nov 25, 2008 at 0502 hrs IST

Kolkata, November 24 After being pushed by the Union Home Ministry, the Left Front government will develop a special force to tackle Maoists in Bengal’s western zone. For the purpose, the state’s Special Combat Force (Straco) is being trained and equipped to undertake combat operations in the jungles.
“We already have a specialised force trained by the Army, which is camped in Lalgarh,” said IG (Law & Order) Raj Kanojia. “Now we are training them to operate in tough terrain.”

The Straco, comprising men selected from the police force, are trained by the Army through its Junior Leaders’ Training Establishment set up in 2005. The number of companies — 14 now — is likely to be increased.

“The Union government wants this force to be developed on the lines of Greyhounds in Andhra Pradesh,” said a top officer of the Bengal Police. “Straco is similar to Greyhounds but we need to upgrade it by providing specialised equipment and better training. The matter was discussed at a meeting in Delhi recently where the director general of police was present,” he added.

Meanwhile, the tribals reached the West Midnapore district headquarters on Monday and dug up a road in Midnapore town, which leads to Jhargram. As a result, the area remained cut off for the 17th day.

The police and administration are in a fix over resolving the Lalgarh issue. According to police sources, the movement is being led by an active Maoist leader, Sasadhar Mahato, the prime suspect in the Chief Minister’s convoy blast case. However, no action can be taken against him because of the mass agitation. The police are not in a position to even enter tribal areas, and they cannot accept the demand that charges against Mahato be dropped. The police have also refused to hold meeting with the Maoist-backed agitators in a remote village in Lalgarh, which sparked the agitation after the police raided in on November 4.

In another development, Congress MP Rahul Gandhi has sought a report on the Lalgarh situation from the West Bengal Pradesh Youth Congress Committee. A Youth Congress team visited Lalgarh today and prepared a report to be forwarded to state Youth Congress president Amitava Chakraborty.

CM wants to discuss issue in Assembly
Chief Minister Buddhadeb Bhattacharjee on Monday asked Left Front MLAs to raise the Lalgarh stalemate in the Assembly during the ongoing winter session. In a Left Front’s parliamentary meeting, addressed by the chief minister, it was clear that the Left MLAs would attack the opposition for hobnobbing with the Maoists. The government has decided to move three private motions against the Opposition for instigating anti-state activities. Meanwhile, the Congress and the Trinamool Congress are gearing up to move an adjournment motion, blaming the state government for its failure to tackle the Lalgarh crisis and the lack of development in the tribal areas.
http://www.expressindia.com/latest-news/to-tackle-maoists-in-lalgarh-special-force-to-be-upgraded/390286/

State Congress requests Rahul to expose the ‘true face of CPM’
Font Size  Express News Service
 Posted: Nov 26, 2008 at 1950 hrs IST
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Mamata to take up PTTI issue, says govt deceived students
Cong seeks Gandhi’s intervention in Lalgarh crisis
Fever’s latest victim: Trinamool leader
Mamata starts campaign from Behala
CPM is trying to politicise steel project foundation, says TMC, CongKolkata : As the tribal agitation in Jhargram over the November 2 Salbani blast entered its 19th day, the state Congress requested AICC general secretary Rahul Gandhi to visit the area and see how the “tribals were being tortured by the police and CPM cadres”.
In a letter to Gandhi, Congress Legislature Party leader Manas Bhuniya appealed to him to send a high-powered team to the trouble-torn Lalgarh before his visit. The team should mostly comprise leaders from the Scheduled Castes and the Scheduled Tribes, the letter stated.

Earlier, Gandhi had sought a report on Lalgarh situation,

Bhuniya said. Giving details of the alleged torture and police atrocities on tribals in the area after the blast in chief minister’s convoy, Bhuniya had requested him to raise the issue in Parliament to expose the “true face of the CPM”.

He claimed that even after nearly three weeks since the agitation begun, no action has been taken against any police officer.
“The Congress will launch a 36-hour sit-in demonstration in front of the Lalgarh police station on Wednesday,” he said. On Monday, a youth Congress delegation had met the protestors at Lalgarh, including the women who were tortured by the police.
http://www.indianexpress.com/news/state-congress-requests-rahul-to-expose-the-.../390931/

 

Tribals launched a fresh round of agitation in Lalgarh on Tuesday. Roads were dug up again at Penchapara in Salboni, 27 km from Lalgarh,  and many other places like Chilgeria and some villages between Chandra and Dherua. Times of India reports.

CPI(Maoist) leaders held meetings at Patharkumkumi jungle near Lalgarh with the locals to decide what the tribals would do if the administration sits with the Polici Santrash Birodhi Janaganer Committee (PSBJC) by November 28.

"We cannot understand why the protesters are insisting on holding a meeting at Dalilpurchawk. We are ready for discussion again," said Narayan Swaroop Nigam, West Midnapore DM.

"Nothing can be done without taking the Constitution into account," said ADM Raja Aron Israel.

Salboni BDO Pravat Chattopadhyay, Midnapore Sadar SDO Partha Ghosh and DSP (operation) Arnab Ghosh rushed to Penchapara to remove the blockade but failed as villagers obstructed police.

"We will remove the blockade ourselves only if the officials decide to go to Dalilpurchawk and solve the problem of Lalgarh. But we will continue with our stir if you neglect our demands," said Prankrishna Soren, a schoolteacher.

"Why are police and administration fearing common people? Are police officers and civil officials feeling guilty themselves? Why don't we have one standard road, electricity and pure drinking water even six decades after Independence," asked Shyam Chand Murmu, a protester.

Congress leader Manas Bhunia has threatened to sit on a 36-hour dharna in front of Lalgarh PS on Wednesday, demanding punishment for the accused police officers and a CBI inquiry into the ambush on the chief minister's convoy at Salboni on November 2.

Gana Mukti Parishad president Sunanda Sanyal went to Chhoto Pelia with six other members to listen to tales of police torture on Tuesday. "This is not the fallout of just one incident. The area has been neglected by the government for three decades and we condemn the role of the police," he said.

 Opposition parties staged demonstrations at different places in West Bengal on Monday protesting alleged police excesses on tribals in Paschim Medinipur district. Parts of the district have remained virtually cut off for more than a fortnight following an agitation by locals in Lalgarh, demanding action against police for highhandedness.

Fresh roadblocks were set up by protesters in the Jhargram sub-division of Paschim Medinipur district as well as in parts of adjoining Bankura district, according to reports reaching here.

Procession

A group of tribals led by Trinamool Congress leaders took out a procession at Asansol in Burdwan district in protest against the alleged police atrocities.

Those leading the agitation alleged that police excesses had been committed on Lalgarh villagers during police raids to track down those responsible for the IED blast that narrowly missed Chief Minister Buddhadeb Bhattacharjee’s convoy on November 2.

Supporters of the Congress and its youth wing staged demonstrations in the Jhargram subdivision against the ‘police excesses.’ They squatted for two hours on the highway that links Kolkata to Mumbai, causing severe traffic disruptions.

The LPG Mafia has made My country a Valley of Death! CHRONY, CASINO and STARVATION Economy Sustained to Kill its Majority People!

If Dr Manmohan Singh is relieved and Chettiyar gangsters disaapear from the scene, we may not have any opportunity to feel relaxed as the recent History of India shows unprecedented CONTINUITY in GOI`s Economic Policies since nieties, no matter what parties or coaliation rules the country. Even the declaerd ENEMY of Capitalism and Globalisation, the great Indian Left is nowhere behind the mainstream Political parties as far as MASS ANNIHILIATION is concerned. The RSS Fascists, who never feel any SHAME in either  ETHNIC CLEANSING or LOYALITY to Zionist White Imperialism rae well set to take over and the Indian Media is doing veery thing to highlight the Prime Minister in Waiting, the Ram Janma Bhhomi Movement leader, the mastermind behind Bengali Refugge Deportation along With Bengali Elite Brahmins like Buddhadeb and PRANAB, LALKRISHNA ADWANI!

Semi fanal for the Great indian Brahaminical power politics is in Progress and  As part of its "carpet-bombing" strategy, BJP on Wednesday held nearly 50 election rallies, mostly addressed by party star campaigners L K Advani, Gujarat Chief Minister Narender Modi and other senior leaders.

Not leaving anything to chance in its bid to come to power in Delhi, the party had asked all its top leaders to campaign for the Delhi Assembly election.

BJP's "good governance" mascot Modi attended several rallies on Wednesday and Tuesday as well.

Other prominent leaders who have addressed poll rallies in the capital include Rajnath Singh, Murli Manohar Joshi, Sushma Swaraj, Arun Jaitely, Chief Minister of Uttarakhand B C Khanduri, cine star Shatrughan Sinha, Deputy Chief Minister of Bihar, Suhsil Modi, and TV actress Smriti Irani.

The Washington Planted Suprme salve Dr Manmohan Singh refers to Chrony Economy sometimes and CASIONO Economy another time. CHETTIAR Gang of worldbank slaves along with FINMIN, Planning Commission, Reserve Bank and well fed Policy Makers and Media have done everything to FEED the MONEY Machine and the CREAMY LAYERs! Chrony economy as well as Casino Economy  sustain to create STARVATION ECONOMY in the Killing Fields of Indian Indigenous Geopolitics besieged!Even as the governments around the globe are struggling to pull their economies out of the financial crisis by injecting trillions of dollars, experts believe the times of layoffs, detrimental economic growth and liquidity crunch is here to stay for at least two years! According to government data released yesterday, the US economy contracted at the fastest pace in seven years with a negative growth of 0.5 per cent in the third quarter this year. The Word bank slaves tagged Indian Economy with US Destiny. The claim Risilience and Decouplation while the unholy couplation continues and the LPG BASTARDS  do everything to ensure MASS DESTRUCTION and it never needs a Nuclear explosion. The Economic Disaster is greater than any Nuclear war! Creation of a mechanism for strengthening technology transfer and financing architecture to meet adaptation and mitigation cost will be key issues on which India will negotiate at the forthcoming United Nations Framework Convention on Climate Change (UNFCC) meet scheduled next week in Poland.

The Centre on Wednesday said it has deferred a for Foreign Direct Investment proposal from global media conglomerate Dow Jones, publishers of Wall Street Journal, for taking out the facsimile edition of the business daily in India.

Announcing the approval for 32 FDI proposals, the Finance Ministry on Wednesday said Dow Jones & Company had proposed to set up a wholly-owned subsidiary "to carry out publishing of facsimile editions of newspapers".

A facsimile edition of a newspaper published abroad is its exact replica without any local content or advertisements.

The media giant already has its presence in India through its Wall Street Journal newspaper. WSJ has an exclusive content partnership with Mint, the financial daily published by HT Media .

At present, there is only one foreign newspaper that gets published in India as a facsimile edition.

The International Herald Tribune, the international newspaper of New York Times, is published in India by Hyderabad-based Deccan Chronicle Holdings.

My Office has changed the Bank Account from ICICI to HDFC Bank. I had Zero balance salary Account with ICICI. NOw I have an account with HDFC. My office opened both the account. But it did not care to send a letter to the ICICI Bank informing the Closure. I have got a personal loan from the CITI Bank to buy a Computer at Home. I had no option as ICICI and all the Nationalised Banks refuse to sanction Loan to Scribes, POLICE and DEFENCE Personnels. It was going well as I never felt the burden as the monthly ionstallment was being deducted from my ICICI savings account by ECS. I could not continue the ICICI account as the mandataory depsosit and Mandatory transaction amounted to cross my limit. I could not run both the account. At the same time, I could not close the ICICI Bank account simply because CITI BANK Camac ST, Kolkata could not transfer my ECS from ICICI to HDFC. I had applied immideiately. But they never did load the Bank code as the HDFC bransh , Clive Row, Kolkata One happens to be anew branch. The CITI Bank staff had to create a new Code file to load the code. The cheque bounced. I had to pay no less than Rs 824 for asingle cheque bounce and the EMI amount being only Rs 2021.I applied once again and paid the istalment in cash.They waived the penalty this time but the cheque bounced. Only a few days back, I requested the Bank Official to accept Post dated Cheques for all the EMIs due. They agreed and I deposited. I have to wait for the stoppage of the damned ECS to close ICICI account. meanwhile I have to pay RS 750 for every quarter with 12 percent service tax for non transaction to ICICI bank. And all this Harrasment is created without my fault.

Salary are now credited to bank Acoounts and most banks are Foreign. The Account Holder is bound to ist conditions without any choice!

Meanwhile, visiting so many financial institutions to bail out myself from Purchasing capacity crunch to sustain myself, I had a reare opportunity to share the grievances of the Common masses. While as empowered as I am, I feel the pangs of the Plight, just guess the suffering.

Contending that India is a nuclear-weapon state whether the world recognises it or not, former President APJ Abdul Kalam has said the country needs not go for any more atomic tests to prove this status "again and again". Kalam, who has brought out a special edition of his e-magazine 'Billion Beats' on the Indo-US nuclear deal, has said the country should believe in its strength as he sought to allay fears that the agreement would compromise India's sovereignty. The deal, apart from paving the way for Uranium imports, will help India develop nuclear technology that the world may need in the future, said the strong proponent of the agreement in an article 'Strength respects Strength'. He said people should believe in the country's strength in economy and security and prove to the world that "India is wiser" in playing a responsible nation in achieving energy independence vision before 2030.

FDI has changed the Scenerio. FDI Magic works behind SEZ, RETAIL, REALTY, CHEMICAL HUBs, NUCEAR PARKS, Consumer market and INFRASTRUCTUR. BANKS, INssurances, Health and Education, IT and entertainment, Construction, Aviation, Rural Development and harvesting, everything including all powerful OMNIPRESENT Media is struck by FDI. Now Corporates and MNCs and India Incs  rule for different governments. The People are ejected out of Hoem, Land and Livelihood and DEINDUSTRIALISATION is dubbed as Industrialisation, Devastation of Indigenous market and Production syastem is termed as Development. Displacement is named as URBANISATION. License to KILL is called DEMOCRACY!

An empowered Group of Ministers, headed by External Affairs Minister Pranab Mukherjee, is likely to meet soon to discuss a proposal to exclude foreign institutional investors' stake from the overall FDI ceiling.

Despite slowdown in the global economy, India received 17.21 billion dollar between April-September this financial year, showing an impressive increase of 137 per cent from 7.25 billion dollar in the first half of the previous fiscal.

While the DIPP is understood to have mooted the proposal for excluding the foreign institutional investors' stake in companies from the overall FDI ceiling, the plan is believed to have been opposed by the Finance Ministry and the Ministry of Corporate Affairs. The issue will be resolved by eGoM.

Between April-August, data for which has been officially released, manufacturing has attracted an FDI of five billion dollar, showing an increase of 41 per cent over inflows in the year-ago period.

Undeterred by global credit freeze, India maintains a bullish outlook on attracting Foreign Direct Investment which may be governed by easier rules, a top government official said on Wednesday.

"FDI inflows were robust till September and...my sense is that the October figures will be robust as companies like the General Motors, Volkswagen and Toyota are going to execute their ongoing projects," Department of Industrial Policy and Promotion (DIPP) Secretary Ajay Shankar said in New Delhi. He said the issue of "liberalisation and rationalisation" of FDI policy was under inter-ministerial consultation. "A decision is expected soon", he said at a FICCI function in New Delhi.Asked whether the government is mulling import restrictions to protect the domestic industry, Shankar said both fiscal and monetary measures would be used to stimulate demand and maintain growth.

Meanwhile,The BSE benchmark Sensex climbed 3.8 per cent on Wednesday in a late rally led by financials as rate cut expectations gathered momentum after China lowered its interest rates.

Finance Minister Palaniappan Chidambaram had said on Monday the focus had shifted to bolster growth as inflation cooled, and a Reuters poll forecast on Wednesday annual inflation would have dropped to a seven-month low of 8.56 per cent in mid-November.

Affluent Classes have to do nothing with Mass Movements, Public Grievances and Isurrections as Top airlines in India have withdrawn a transaction fee on air tickets effective Wednesday for tickets sold through call centres, websites or city offices. Air India, Jet Airways and Kingfisher Airlines have withdrawn the fee, which ranges from 350 rupees on a domestic economy ticket to 1,200 to 10,000 rupees on first class international tickets.

Indian Politicians of Brothel Culture and most Politicalised, Corrupt Next after the Politicians, the Media are PREVILEGED enough to enjoy LIFE in Americanised Colonial FREEseSEX Shining INDIA ruled by BRAHAMINICAL Hegemony in alliance with Zionist WHITE HINDU GALAXY Order of Post Modern MANUSMRITI and APARTHEID. What if BARRACK OBAMA takes over the OVAL OFFICE in the White House in Washington!The US economy contracted at its fastest pace in seven years in the third quarter as consumer spending plunged to a 28-year low, data showed on Tuesday, raising the specter of a deeper recession. Separate reports showed US home prices continued their downward spiral, with the cost of single-family homes plunging by a record 17.4 per cent in September from a year earlier. The data painted a dismal picture of the troubled economy and backed views the Federal Reserve could push benchmark lending rates to an unprecedented zero per cent by early 2009.

At home,reports from Mumbai say that ICICI Bank, India's second-largest lender, rose 9.6 per cent to 350.50 rupees, while smaller rival HDFC Bank firmed 8.6 per cent to 907.20 rupees. Leading lender State Bank of India gained 3 per cent to 1,104.25 rupees.

China slashed its one-year lending and deposit rates by 108 basis points in its fourth cut since mid-September to help its economy weather the global economic slowdown. Traders said the move strengthened prospects for a rate cut by the Indian central bank.

 

A businessman fed up of being harassed by debt collectors because of a wrong entry in his loan repayment record held three of them hostage until the bank clarified in writing that he wasn’t a defaulter. The Telegraph Kolkata reports.

The report follows:
Subhashis Chatterjee, 35, told Metro after the six-hour drama on Tuesday evening that he decided to take the “extreme step” after several intimidating calls from a loan recovery agency hired by ICICI Bank.

“The callers claimed that I hadn’t paid my personal loan EMI for March 2007, along with some extra charges for defaulting on repayment. I told them that I had documents to prove them wrong but they wouldn’t listen,” he said.

Subhashis, a resident of Sarojini Pally in Barasat, had taken a personal loan of Rs 50,000 from ICICI Bank in January last year to expand his air-conditioning and fridge repairing business. The EMI was fixed at Rs 2,406 for 36 months.

The businessman, who had opted for electronic clearance instead of giving post-dated cheques, defaulted on the second EMI because of insufficient funds in his account. “The bank sent a collection agent to my home a few days later and I paid the EMI in cash,” he said.

Subhashis thought the matter was settled but a representative of the bank called two months later to say that he had “missed” the EMI for March. When he went to the Gurusaday Road branch of ICICI Bank to enquire why he was being harassed, it turned out that the culprit was the collection agent.

“The loan account number he wrote in the receipt was not mine. The bank rectified the error and assured me that I would not receive any more calls,” Subhashis recalled.

 
But an official of ICICI Bank called Subhashis again a few days later and requested him to visit the branch for a “clarification”. On reaching the Gurusaday Road branch, he was asked to speak to a bank official in New Delhi over phone. “I had to repeat what I had said earlier, after which the official said there would be no more confusion.”

Subhashis continued paying his EMIs — 21 out of 36 till this month — and forgot about the dispute until a collection agent called on October 17 and said he owed the bank an extra Rs 4,300, payable immediately. Another caller said the outstanding amount was Rs 1,906.

More calls followed over the next few days, some of them allegedly threatening ones. “A couple of callers even abused my family members,” Subhashis said.

After consulting some friends, he decided to teach them a lesson. When a collection agent called on Monday, Subhashis asked him to come to his residence on Tuesday and take the “outstanding amount” in cash.

The collector arrived at Subhashis’s home around noon and immediately wrote a receipt. Subhashis showed him his bank statement and the receipt for the March ’07 EMI that he paid in cash but the collector wasn’t convinced. “You can call the police or go to court but I won’t leave without the payment,” Subhashis quoted him as saying.

Subhashis and his friends, who had arrived by then, took the collector to a room and asked him to call his senior. When two more representatives of the bank, one of them a supervisor, arrived an hour later, they were asked to speak to the bank and ask for the complete repayment statement.

The trio were allowed to go only after a bank statement was emailed to the supervisor and he took a printout from a nearby cyber café to give Subhashis.

A spokesman for ICICI Bank admitted that Subhashis had been unnecessarily harassed but said his method of getting justice was illegal. “We could have lodged a police complaint but didn’t do so because he apologised for holding our men hostage.”
http://www.telegraphindia.com/1081126/jsp/calcutta/story_10163664.jsp

 

The global economic downturn is going to continue for next one and half to two years. Post the downturn, the economy will stabilise but at a much lower level (in relative GDP growth rate) compared to the booms that we saw in 2005-2007 era," said Mayank H Shah, Global Capital Markets and Derivatives expert and Associate Partner at IBM.

Besides, a recent survey of global fund managers by Merrill Lynch revealed that four out of every five investors believe the world will continue to be gripped by recession in the coming years.

Policy makers have offered fiscal stimulus packages, liquidity and interest rate cuts, but investors are not yet ready to give their policies the benefit of the doubt.

About 40 per cent of the panel still believe that monetary policy is "too restrictive" and asset allocators remain overweight cash and bonds relative to equities.

What a situation!

Economic turmoil will erode the wages of millions of workers in 2009, fanning the flames of global recession, the International Labor Organization (ILO) said on Wednesday. Inflation-adjusted pay in rich nations will fall 0.5 per cent in the coming year -- the first wage decrease since before 2001 -- after having increased 0.8 per cent this year, according to new estimates from the United Nations agency.

Developing country wages should prove more resilient, led by continued gains in China and India, the ILO said. On a global basis, it estimated real wages will rise 1.1 per cent in 2009, compared to 1.7 per cent in 2008.

"For the world's 1.5 billion wage earners, difficult times lie ahead," ILO Director-General Juan Somavia said in the Global Wage Report, whose comparable data only stretches back to 2001.

Somavia, a Chilean, called for strong collective bargaining to counter any decrease in wages linked to the world's financial and economic crises that the ILO has previously said will wipe out 20 million jobs by the end of 2009.

In previous periods of contraction, every 1 percentage point drop in gross domestic product (GDP) per capita brought about a 1.55 percentage point decline in average wages, making it even harder for people to spend and invest, according to ILO data.

"If this pattern were to be followed in the rapidly spreading global downturn, it would deepen the recession and delay the recovery," Somavia said.

But even when economic growth rates were buoyant, the ILO report said wages have failed to keep pace.

For each 1 percentage point of GDP growth from 1995 to 2007, average wages only increased 0.75 percentage points, with pay rates largely failing to increase in line with productivity growth levels, it found.

Inequalities between top and bottom wages have also risen, most notably in the United States, Germany, Poland, Argentina, China and Thailand, the ILO said.

France, Spain, Brazil and Indonesia were found to have reduced those gaps somewhat in recent years.

Women's wages represent an average of 70 to 90 per cent of men's wages in most major economies, though some Asian nations have larger disparities, the report said.

People at the bottom of the wage ladder will be squeezed hardest by decreasing rates of pay in the coming period of economic contraction, according to ILO expert Manuela Tomei.

"If they fall too much, this will make the crisis even worse," she told a news briefing in Geneva.

Greater efforts to empower workers and enact minimum wage laws should help more people weather the coming storm, the ILO concluded. "We think that it is important to encourage collective bargaining and social dialogue," Tomei said.

India must banish the thought of recession: FM

 Hoping that the worst is over on inflation, Finance Minister P Chidambaram on Monday said India must banish the thought of recession even though the overall outlook for the economy continues to be of "cautious optimism" in the face of global turbulence.
"I hope the worst is over," Chidambaram said on inflation, inaugurating the annual Economic Editors Conference in New Delhi. The rate of price rise has declined to 8.90 per cent for second week of November after touching 12.91 in early August.

The Finance Minister said the policy interest rate may moderate if inflation continues to decline and there would be "bias" in favour of growth.

Among the strategies to revive the business confidence, the government is contemplating increasing expenditure on infrastructure projects.

"Increasing expenditure on infrastructure is being contemplated" to address concerns over global slowdown," he said agreeing the country faces a "difficult situation".

Projecting a growth of 7-8 per cent for current fiscal, Chidambaram said, "In our view, we may expect a moderation in growth rate in the current year."

 

What an Amusement! Oil Prices slided from 147 Dollars to 49 Dollars! ATS Fuel prieces reduced three times. Airlines relieved. but no relief for COMMON MAN!

The  Petroleum Minister encashes the CRISIS hinting REDUCING on POLL EVE. All Hue and Cry is all About Power Politics. No one is concerned with the Public grievances!

Remarks on oil price cuts not made ‘knowingly': Deora Claims. But the Election Commission issued notice to Petroleum Minister Murli Deora for his remarks on effecting a fuel price cut after the conclusion of assembly elections next month. Opposition BJP had approached Chief Election Commissioner N Gopalaswami over the issue on Wednesday contending that the announcement amounted to violation of the Model Code of Conduct enforced by the Commission.

 

Petroleum Minister Murli Deora said he had not made the announcement ‘knowingly’.

"I am upset over these reports. I would never do something knowingly," Deora said.

The Election Commission has sought an explanation from Deora on his remarks on fuel price cuts, following complaints by the BJP, which said the minister's statement amounted to violation of the model code of conduct.

"I have been in public life for 45 years. I have fought nine elections and never been issued any notice before," Deora said.

Asked whether he has written a letter to Congress president and UPA chairperson Sonia Gandhi, Deora said, "These are things I would not like to discuss."

On fuel price cut, he said, "We are trying to do our best."

Deora also said there was a contradiction between statements of BJP leaders V K Malhotra and Arun Jaitley.

With a drop in prices of crude oil in the international market, "there is an expectation that prices need to be reduced. I am also of the opinion that they should be reduced and that will happen after December 24," Deora said on Tuesday.

Spectrum policy: Delhi HC issues notice to UPA Govt

The spectrum allocation policy followed by the Centre in recent years has come under judicial scrutiny as the Delhi High Court on Wednesday sought response from the government on a petition challenging the policy.
A Bench comprising Chief Justice A P Shah and Justice S Muralidhar issued notice to the government and fixed the matter for further hearing on December 10.

The petition filed by an NGO, Telecom Watchdog, contended that the government allotted the spectrum without following any policy and cellular operators were provided excess spectrum without charging them for the scarce resource since 2001.

"The government should withdraw the excess spectrum from the operators by applying the tougher of the two spectrum allocation norms suggested by TRAI and TEC," contended advocate Prashant Bhushan, appearing for the NGO.

The court, however, refrained from issuing notice to cellular companies.

Indian IT firms unfazed by Obama's tax plans
Indian IT and IT-services companies seem undaunted by the potential impact from US President-elect Barack Obama's proposal to repeal tax breaks for companies that outsource certain operations to offshore centers.
"I don't see Obama doing anything terribly drastic. I think he has enough on his plate; he has got a trillion-dollar bailout and probably got another trillion dollars coming on top of that which he has to finance," Genpact Ltd's Chief Executive Pramod Bhasin said at the Reuters India Investment Summit.

Obama's tax plans are unlikely to affect the outsourcing industry because of the scarcity of IT talent in the United States, Suresh Senapaty, chief financial officer of Wipro Ltd, told the summit, held at Reuters Bangalore office.

Over the past few years, IT-services firms armed with competitive, English-speaking professionals working for relatively cheap wages have cashed in on an outsourcing boom. But they are now experiencing a lull in growth as the US economy faces one of the worst crises in history.

Obama's plans to encourage US firms to keep jobs in the country have raised concerns that Indian IT-services firms could lose out as more services are retained in the United States.

"Barack Obama will repeal tax breaks that reward corporations that retain their earnings overseas, and will use those savings to lower corporate tax rates for companies that expand or start operations in the United States," according to Obama's website.

With unemployment rates in the United States rising and Wall Street giants collapsing, merging or rushing to chop their workforces to mitigate costs, Obama faces growing political pressure to keep jobs at home.

But IT industry experts concur with the view of Indian firms that the policies of Obama, who will be the first African-American president of the United States, may not be so taxing after all.

Currently, the US Internal Revenue Code allows corporations to offset losses in overseas jurisdictions against profits made in the United States, analysts Kishore Belai and Shashi Bhusan of Macquarie Research Equities said in a research report earlier this month.

The code also allows companies operating through subsidiaries overseas not to pay taxes on profits made by the units unless those profits are directed back to the United States, they said.

The tax plan proposed by Obama, who will be sworn in as president on Jan. 20, seeks to revoke this benefit.

"Such provisions may have the perverse effect of making US companies uncompetitive in overseas markets rather than deterring offshoring," the Macquarie analysts said.

Indian IT-services companies like Infosys, Wipro and Tata Consultancy Services Ltd could get an edge over U.S. companies such as Cognizant and IBM, they said.

The India-domiciled companies will continue to pay lower taxes, while Cognizant and IBM will have to pay out more, the analysts said.

"It is not very tangible because he (Obama) cannot dictate what companies do or do not do," Avinash Vashistha, CEO of Tholons, an investment advisory and management consultant firm, said.

Vashistha said it would be easier for Obama to control jobs that are going offshore in the manufacturing sectors such as textiles and autos.

"But as far as the (IT and BPO) services jobs are concerned, we expect no changes," he said.

Chaitanya Ramalingegowda, the director of advisory services at Zinnov Management Consulting Pvt Ltd, believes companies probably need to adopt a "wait and watch" policy to see how many of Obama's tax plans are actually implemented.

"These are uncertain times. You can't really make some very insightful statements. We are closely watching the situation," Anantha Radhakrishnan, a vice president at Infosys BPO, said at the summit.

But currently, he does not expect to see any fundamental changes in the outsourcing environment due to Obama's plans.

Zinnov's Ramalingegowda said, "On the one hand (Obama) has said he is going to take away some of the tax breaks, and on the other hand he has said, very categorically, that the trend of outsourcing cannot be reversed."

That every successive administration in the last decade has eventually succumbed to the pressures of globalization suggests that regardless of how different political formations package their policies in advance of the elections, there is a powerful and very vocal lobby for globalization in India. This is because for some sections of Indian society and the Indian diaspora, globalization has come as something of a bonanza. NRIs look forward to new business opportunities in a globalized India. English-language (or even local language) media outlets who expect globalization to increase advertizing revenues have also been eager supporters of globalization. (A recent Economic Times survey of the nation's top CEO's indicated that most major India businesses anticipated considerably higher allocations for marketing and advertizing campaigns in order to survive in the globalized Indian economy. Some estimate that the advertizing industry has been one of the fastest growing industries in India - growing as much as 25-30% in some years.) Another outcome of globalization has been a huge increase in salaries of senior managers, accountants, lawyers and public-relations personnel working for MNCs or their local competitors. For the IT-literate, job opportunities have been plentiful, and there are also opportunities to live and earn abroad. For the English-speaking upper middle-class, this has come as a boon. With greater access to disposable income, the seduction of consumerism becomes hard to resist, and the demand for unrestricted globalization inevitably follows the attraction for new and ever more advanced consumer goods. This new and more prosperous class of Indian consumers associates India's progress with the availability of the latest automobile models and consumer goods. The local availability of imported European cosmetics and fashions, imported drinks and confectioneries - these have all become important to those who have sufficient disposable income to purchase such items.

In the 1990s, the forces of globalisation exploded in India: a formerly tiny middle class quickly expanded, international trade burgeoned, and privatisation of state-controlled industries and sectors proceeded apace. Globalisation poses particular challenges to nations and national identity, and nations have responded to the myriad and complex forms and forces of globalisation in contradictory ways. In India, nationalism grew in strength and the major Hindu nationalist party took power for the first time in decades. Using the discourses of identity and belonging in 1990s India, this book explains how the cultures of neoliberalism become dominant. Rupal Oza examines three sites of public national debate that occurred in the 1990s: the privatisation of television, the 1996 Miss World Pageant (a publicity event meant to sell an image of a new, more liberal and secular India), and the nuclear weapons tests of the late 1990s, which nationalists correlated with masculine virility. Oza argues that globalisation has reconstituted the nation spatially, culturally, and economically along neoliberal lines and explores which gendered and sexual identities are privileged over others (and, as a consequence, who belongs in the nation and who does not).

"Death Valley '69" is a song by the American alternative rock band Sonic Youth and is the eighth and final track on their 1985 album Bad Moon Rising. The song was written and sung by guitarist Thurston Moore and fellow New York City musician Lydia Lunch, and recorded and produced by Wharton Tiers in July 1984. A demo version of the song was released in December 1984 on Iridescence Records, and it was released again in single format with different artwork in June 1985. The Flaming Lips' Finally the Punk Rockers Are Taking Acid includes a live cover of the song.

Although these sections of society are in numerical terms a very small minority in the country, they are able to wield considerable authority on account of their financial clout. Their voices are far more likely to be heard in the Indian media, and they are much more likely to be able to influence important political decisions in the country. Because of their familiarity with English, and privileged access to major media outlets and institutions of higher learning, they are taken to be more credible, and are thus able to exercise tremendous influence on public policy.But the greatest danger posed by unrestricted globalization is that it may exacerbate the problems of nagging poverty and uneven development, and create grave infra-structural mismatches. It is already evident that the Indian economy has become more dependent on imports which has brought with it constant pressure on the value of the Rupee, leading to recursive bouts of high inflation. And rather than expand India's manufacturing strength and develop new capabilities and technological development in India, globalization may in fact put India at a global disadvantage in key sectors of modern industry leading to an economy that is always chasing scientific and technological advances that occur in other nations.

 

Death Valley
From Wikipedia, the free encyclopedia

Death Valley is the lowest, driest and hottest[1] valley in the United States. It is the location of the lowest elevation in North America at 85.5 m (282 ft) below sea level. It holds the record for the highest reliably reported temperature in the Western hemisphere (134 °F (56.7 °C) at Furnace Creek in 1913, as discussed below) - just short of the world's highest, which was 136 F (58 C) in El Aziza, Libya on Sept. 13, 1922. Located southeast of the Sierra Nevada range in the Great Basin and the Mojave Desert, it constitutes much of Death Valley National Park. It is mostly located in Inyo County, California. It runs north-south between the Amargosa Range to the east and the Panamint Range to the west; the Sylvania Mountains and the Owlshead Mountains form its northern and southern boundaries, respectively. It has an area of about 3,000 square miles (~7,800 km²).[2]

Native population
Death Valley is home to the Timbisha tribe, who have inhabited the valley for at least the past 1000 years. Some families still live in the valley at Furnace Creek. The name of the valley, tümpisa, means 'rock paint' and refers to the valley as a source of red ochre paint. Another village in the valley was located in Grapevine Canyon near the present site of Scotty's Castle. It was called maahunu in the Timbisha language, the meaning of which is uncertain although hunu means 'canyon'.
http://en.wikipedia.org/wiki/Death_Valley

The Valley of Fear: A Sherlock Holmes Novel
by Sir Arthur Conan Doyle. 322 pgs

I am inclined to think- said I. "I should do so," Sherlock Holmes remarked impatiently. I believe that I am one of the most long-suffering of mortals; but I'll admit that I was annoyed at the sardonic interruption. "Really, Holmes," said I severely, "you are a little trying at times." He was too much absorbed with his own thoughts to give any immediate answer to my remonstrance. He leaned upon his hand, with his untasted breakfast before him, and he stared at the slip of paper which he had just drawn from its envelope. Then he took the envelope itself, held it up to the light, and very carefully studied both the exterior and the flap. 

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One of the most popular of all the Sherlock Holmes novels 

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Book 7 of the Sherlock Holmes mysteries. Sherlock Holmes receives a cipher message from his agent named Porlock predicting the murder of a rich country gentleman. Minutes after he deciphers the message, Scotland Yard informs him that the murder has already taken place, under mysterious circumstances. Sherlock Holmes, together with his friend Dr. Watson, travels to Birlstone Manor to unravel the mystery. There they were told a number of truths and lies, and found myriad clues, true and false. Sherlock Holmes must unravel the tangle to find out what really happened, and in the process discovers the amazing history of a very remarkable man. 

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Book 7 of the Sherlock Holmes mysteries.

Sherlock Holmes receives a cipher message from his agent named Porlock predicting the murder of a rich country gentleman. Minutes after he deciphers the message, Scotland Yard informs him that the murder has already taken place, under mysterious circumstances. Sherlock Holmes, together with his friend Dr. Watson, travels to Birlstone Manor to unravel the mystery. There they were told a number of truths and lies, and found myriad clues, true and false. Sherlock Holmes must unravel the tangle to find out what really happened, and in the process discovers the amazing history of a very remarkable man.
 

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'

The Valley of Fear
 

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The last of the 'Sherlock Holmes' novels. 

Globalisation, Privatisation and Liberalism in India
In a July 20 Times of India report titled 'IT expert warns against digital divide in country' the author wrote: A leading information technology (IT) expert has cautioned against a "digital divide" in the country and creation of disparities between the IT haves and have-nots. The report quoted M. Anandakrishnan (vice-chairman of the information technology task force of the Tamil Nadu government and the vice-chairman of the Tamil Nadu state council for higher education) as saying: "You cannot have a high-tech facility and have 50,000 people within a few kilometres who don't have any access to computers. Availability of computers in every village did not mean accessibility and accessibility does not mean assimilation. Unless there is 'localisation of content' this technology could not be used by 97 per cent of the population." The article goes on to question the euphoria surrounding the growth of the IT sector and again quotes M. Anandkrishnan: "We speak of 57 per cent growth of the software sector and 100 per cent growth of the hardware sector. We must take into consideration that the figures include hardware and equipment imports. We are talking of someone else's products. We are still dependent on imports, and even now we have to use servers abroad to get to the Net". (Although there are some companies that assemble personal computers in India, India's share of world hardware manufacturing is less than that of Taiwan, Korea, Malaysia, China, or Singapore - even lower than Thailand or the Philippines). M. Anandkrishnan was also quoted as saying that the productivity of Indian labour was very low - that Indian workers earned one thirtieth of what a Japanese worker took home, concluding that the burgeoning of IT could be termed a "revolution" only if a "high intensity of growth," was indicated. The absence of any significant investment in the local design and manufacture of advanced electronic components, computer chips or telecommunication hardware must be seen as a significant failure of this decade of rapid globalization.

Advocates of globalization have often made the claim that globalization rather than destroy Indian industry would instead accelerate the growth of new industry and cause India's economy to grow faster. But a detailed analysis of Foreign Direct Investment (FDI) in the last few years indicates that a sizeable portion of this investment has not gone into the creation of new productive capacities. Much of the investment has simply gone into into takeovers of existing Indian enterprises or towards speculative investments in the Indian stock market. Moreover, other than India's "hot" IT companies and select MNCs - the vast majority of Indian stocks have not benefited from such highly volatile FDI flows.

In addition, several MNCs have deliberately launched new 100% owned ventures that consciously undercut already existing partnerships with Indian manufacturers. Ironically many of these predatory ventures are funded by Indian banks and financial institutions! An Economic Times report (Dec 25 1999) cited Gouri Prasad Goenka, who took over as the Federation of Indian Chambers of Commerce & Industry (FICCI) president last month as complaining that MNCs were using Indian capital to take over Indian industry! He had said that the grant of approvals for 100 per cent subsidiaries in areas where the multinational already had a venture with a local partner was a danger signal for shareholders as well as industry. Amit Mitra, Ficci secretary, supplemented Goenka's objection by saying that in the United States, an agreement between joint-venture partners had a conflict of contract clause. Goenka also complained that MNCs were able to get loans from Indian financial institutions at interest rates lower than those offered to domestic industrialists and pointed out that nowhere in the world was a 100 per cent subsidiary allowed in non-technical areas. A report in the Hindustan Times by Nitya Chakroborty pointed to the case of Pfizer - the US pharmaceutical major lobbying to set up a 100% subsidy in direct competition with it's existing Indian venture that was partially Indian-owned. She also mentioned the tobacco giants as lobbying hard for permission to set up 100% subsidies.

MNCs and 'transparency' and 'ethical practices'

Arguments favoring globalization have often centered on how multinationals practice 'transparency' in their business dealings and are more 'ethical' than their Indian counterparts. Although rarely substantiated with any thing other than anecdotal testimonies, such praise for the MNCs is common in the Indian media. Yet, there are numerous instances where multinationals have not only displayed a lack of ethics and 'transparency' but have actually broken the law. Consider an October 2, 1998 report in the Hindu titled: Large-scale tax evasion by MNCs unearthed. The author of that report, Sujay Mehdudia wrote: "Income-Tax officials have alleged that these companies evade taxes with impunity as the tax laws of the country are 'inadequate and ineffective' to deal with such cases." He wrote of multinational giants flouting tax laws knowing very well that they could not be arrested or criminally prosecuted against under the Indian legal system and could get away by paying the tax dues when caught. Violations were neither rare nor exceptional, since all the companies surveyed or scrutinized by the Income-Tax authorities in the recent past had shown a tendency to violate the law of the land. The article quoted a high-ranking tax officer as saying: "Had the violations taken place in some other country, not only would criminal proceedings have been launched but the people responsible for it would have been put behind bars." The author concluded his article with the statement: "In the recent past, cases of TDS evasion by some Japanese and South Korean firms operating in India have come to the notice of the authorities, highlighting a ``certain intention'' on the part of these companies to dupe the Government."

A more recent Hindustan Times report (May 12 2000) was more specific - it began with the headline: Rs 2100 crore tax evasion by MNCs. Minister of State for Finance V Dhananjaya Kumar in a written reply to a question posed in the Lok Sabha had provided data that indicated that MNCs had evaded Rs 1433.89 crores on income tax, Rs 143.80 crore on central excise duty as well as Rs 535.05 crore on account of import duty payable during last three years. Sony was identified as the biggest evader, and charged with evading over 450 crores. SEDCO Forex International Drilling Co, Swiss-Swedish major Asia Brown Baveri, Hyundai Motors, Johnson & Johnson, Siemens, LG, Hawlet Packard and Philips were others implicated in cheating on import duties. Several MNCs had not paid enough central excise duties - including stock market darlings like Hindustan Lever, Procter and Gamble and Nestle. EID Parry, Gillette, Pepsi, Bayer, Novaritis and Carrier Aircon were also named as violators. Asia Satellite Telecom, Sabre Inc, Lucent Technologies, Nokia, Caribjet inc and Allied Signal group had been cited for serious income tax violations. Amadeus Marketing, American Airlines, British Airways, Pan Amsat, Motorola, Ashurst Morris Crisp, Reuters and ABN Amro were also in the list of companies to have evaded income tax.

'Efficiency' in whose interest - the MNC or the Indian consumer?

Another oft-repeated argument in favor of globalization is that multinational companies are more "efficient". Of course efficiency is never clearly defined. For instance, let us assume that efficiency equals profitabilty. Suppose a multinational invests 1000 crores and makes 200 crores in profit. On the other hand, assume that a domestic company invests 1000 crores and makes 100 crores in profit. It would thus seem that the MNC was more "efficient" - twice as much as the Indian company. But if half or more of the MNC's profits were repatriated to their foreign parent or to foreign shareholders, the relative benefit to India would be nil! And if the 100 crore in extra profit accrued only due to special tax breaks and other special favors granted to the multinational, the increase in 'efficiency' would be entirely fictitious.

Take another example. Let us suppose that the MNC is actually very "efficient" and is able to drive it's more "inefficient" Indian competitors out of business. With it's Indian competitors out of business, it could then raise prices over and beyond what the "inefficient" Indian companies charged their consumers. Here is another example of where "efficiency" from the point of view of the business does not translate into benefits for the Indian consumer. This has occurred not only in the soft-drinks sector, it has also occurred in the pharmaceutical sector.

Others have argued that the presence of multinationals would end the corrupt practices that hurt the 'efficiency' of India's public sector companies. The power sector is one such area where there is a clamour for speedy privatization. But consider a recent Times of India report (17 July 2000) where a report by the Comptroller and Auditor-General (CAG) of India was cited, pointing to the wastage of crores of rupees in the process of privatizing Orissa's power sector. According to the report, foreign consultants were appointed in violation of guidelines and no attempt was made to engage domestic firms for the purpose. The consultants, engaged to "effectively start and give a momentum to the reform programme'', were given a 582 per cent increase over the originally estimated time to do their work. However, their work spilled over to the third stage forcing the state to cough up an additional expense of Rs 72.96 crore. A sum of Rs 2.95 crore was also reimbursed to them without verification of supporting documents, the report pointed out. The implicated agency was DFID of Britain. The report said that during the selection process, World Bank's senior energy economist virtually put pressure on the government to opt for foreign firms, particularly KPMG, UK, and Arthur Andersen, USA, and sent the list for approval. The state government agreed to the WB official's suggestion without inquiring into the firms' experience and capabilities, the CAG report said. The WB staff, in violation of the Bank's own guidelines and without request from the government, also reviewed suo moto the proposals submitted by the short-listed consultants and took Rs 2.2 lakh as service charges. A consortium of consultants led by KPMG was finally chosen, with whom the state government entered into an agreement. The other members of the consortium included the National Economic Research Associates Inc. (NERA), USA, Mckenna & Co., London, and Monenco Agra Inc., Canada. Globalization of Orissa's power industry - (one of the few power surplus states in the country) has brought neither improved service nor lower costs. In Maharashtra, Enron remains the most expensive supplier of power charging the Mahrashtra State Electricity Board more than double what Tata Electricity Company charges. Moreover, it's power is produced using imported fuels making India more dependant on the international market.

There is also an assertion that globalization allows India to allocate scarce capital more efficiently because the Indian government could concentrate on areas that need special attention. But few seem to note that in this decade of globalization, the government has been steadily reducing it's ability to fund vital social needs or infra structural needs. Numerous tax breaks have been given to MNCs to set up manufacturing in India. States have competed with each other in offering concessions to MNCs. Maharashtra has huge concessions to Skoda for it's automobile plant near Aurangabad, Tamil Nadu offered special incentives to GM to set up it's plant near Chennai. Karnataka and Andhra Pradesh have been competing to attract IT businesses in their state. Even the Central Government has joined in the act.

In a report titled: Export give-aways to cost govt Rs 760 cr, Jayanthi Ayangar (Economic Times) wrote about the various tax holidays provided to exporters. The detailed report suggested that with violations and other means of tax evasion, the loss to the government may ammount to a 1000 crores. Rather than increase the government's ability to solve pressing problems, globalization has actually weakened the government's financial ability to intervene in the areas of education, healthcare and essential infrastructure.

Two years ago, (Deccan Herald, Aug 7, 1998) noted economist and deputy- chairman of the State Planning Board Dr D M Nanjundappa had termed as ''a bad commercial proposition`` the export incentives announced by former Union Commerce Minister Ramakrishna Hegde. ''Excessive higher dependence on foreign capital inflows and rise in exports is likely to be dangerous. Unless there is a sustained growth in exports arising from improvement in the competitive strength of the Indian industry, our hope to recover will be the willo-the- wisp," he said. Referring to the incentives offered for exports during 1995-96 by the Narasimha Rao government , he said though the revenue loss varied between Rs.18,00 crore and Rs.23,000 crore, exports rose only by Rs.10,000 crore. Losing Rs.25,000 crore of revenue to get export earnings of Rs.10,000 crore was not a good proposition adding that the loss of revenue and its implications were crucial. Two years later, his concerns remain just as valid since the trade deficit has widened to a record of 4 billion dollars for the last quarter. India's trade deficit grew almost 27% for the last quarter in spite of a substantial increase in exports. Although much of the rise came from fuel imports, growing fuel imports are themselves a negative consequence of poorly thought out liberalization.

As already noted in previous articles on liberalization and FDI, globalization has done little to solve India's pressing infra structural needs. This is particularly evident in the oil exploration and production sector. As a percentage of GDP, investment in oil exploration has fallen dramatically. In spite of deregulation and the award of licenses to multinationals for oil-drilling, domestic production of crude has been falling in both absolute and percentage terms. As a result, in the last quarter (Apr-July 2000), India's oil-import bill jumped 95%.

Skewed development: by-product of indiscriminate liberalization and globalization?

Critics of indiscriminate liberalization had warned that one of the biggest dangers of a totally liberalized economy would be the anarchic development of select geographical areas and the neglect of industrially unpopular areas. This has been reinforced in a report by Tushar Mohanti for the Economic Times Research Bureau. The report pointed out that of all the industrial entrepreneurs memorandum (IEM) filed since the new economic policy came into being in June 1991, only 10% have been implemented so far. In the case of implemented projects, only 10 per cent of the employment commitments were actually realized. He goes on to say that apart from poor implementation rate, what must be disturbing for both the planners and the government is the strong regional bias of the investment proposals. Proving the critics right, (who at the beginning of the reforms had doubted the chances of industrially backward states to derive benefits from the reforms), more and more IEMs have gone to industrially developed states. Other studies have also shown that prosperous states like Maharashtra, Gujarat, and Tamil Nadu and the National Capital region around Delhi have attracted most of the new investment proposals - especially those from the multinationals. In contrast, Mohanti reported that West Bengal, Orissa, Bihar and Assam — all from the east — had failed to take the benefits of deregulation. Bihar, Orissa and Assam each had less than one per cent share of the total IEMs filed during the period. Their shares in actual investment were even lower.

Another aspect of non-selective globalization is that a few select sectors - namely consumer goods, automobiles, and software have attracted almost 90% of all foreign investment. There has been very little investment in the production of advanced electronics, computer or telecom hardware, aircrafts, advanced industrial materials, capital goods and modern tools and equipment, or robotics. These are the areas where India is completely dependent on imports and is likely to fall further behind. Rather than steer production in areas of cutting-edge technology, state governments have been falling over each other in giving MNCs more concessions to produce more of what India is already producing!

Globalization and Privatization

One of the most dangerous aspects of unqualified and unrestricted globalization is the privatization of key publicly held companies to MNCs at prices lower than what it would take to set up a new company in that field. The predatory domination of the world's oil supply by a few Western mega-monopolies is too well-known. Yet, just last year, the BJP-led government sold off shares in GAIL (Gas Authority of India Ltd) at a scandalously low price. A Business Standard story from November 9, 1999 headlined: GAIL sell off opens cheap route to key stake for firms pointed to Enron and British Gas picking up equity in publicly held GAIL at 70 Rs a share when the strategic value of those shares was estimated as Rs 350.

Given the history of the BJP's previous sweetheart deals with ENRON, this giveaway is hardly surprising. But it sets an ominous precedent for the future. Will the euphoria that a section of the Indian population feels vis-a-vis liberalization and globalization blind them to such loot of vital and strategic assets? That the world's former colonial powers should wish India to globalize should not be surprising. Prior to 1947, India's assets and resources were looted to the hilt by the British rulers, and Britain was not the sole beneficiary. The benefits of unfair trade and colonial loot went as much to Britain's allies such as the US, Australia and Canada, and even to rival imperial powers such as Germany and Japan. Although the Indian situation today is not comparable to the situation in 1756 or 1858, the desire of the MNCs to gobble up strategic Indian assets is real and should not be dismissed lightly.

(In recent times, BALCO, the government owned Aluminium mining company came under the auction block and 50% of the company was sold at bargain basement prices. There is even talk of privatizing highly profitable and successful state enterprises such as BHEL)

It is no accident that economic policy "experts" in these nations are the most aggressive champions of privatization and globalization. Selling off strategically vital companies could not only introduce monopoly pricing pressures on Indian consumers, it could also seriously jeopardize India's national sovereignty. As it is, much of India's defence needs are procured from abroad. By privatizing oil and gas companies and other vital infrastructure related companies - India's vital interests will be even more controlled by foreign interests that could impinge on the ability of India to take the best decisions vis-a-vis protecting it's sovereign rights and interests.

To some extent this has already happened. During the Kargil invasion, the BJP government caved in to US pressure by not crossing the LOC even though it prolonged the war for India and led to higher Indian casualties. The manner in which the government has been bending to pressure on India's nuclear program, releasing dangerous terrorists in Kashmir, backing down on it's opposition to Pakistan's military leadership, privatizing key public sector companies and opening India's defence sector under pressure from the US, demonstrates a major policy shift from the days of Indira Gandhi. Such retrograde steps indicate that the obsession with attracting US and British investments into India is leading the BJP-led government into a foreign policy that is based on appeasement rather than any genuine advancement of broad-based Indian national interest.

Apparently an important lesson from India's history has been lost on the present ruling coalition. Before the First World War, Gandhi too had believed that appeasing the British would bring India gains. He campaigned heavily in favor of the British war effort, but after the war, the British rather than make any new concessions towards independence tightened it's colonial control. Gandhi's exercise in "partnership" ended up as a futile exercise in self-delusion and the freedom movement lost precious and valuable years in the bargain.

Those who have been taken in by promises of "partnership" during Clinton's much hyped visit to Indian might note that in spite of all the tall claims, FDI in the months following Clinton's visit actually fell, the trade deficit widened to a new record, and the rupee has shrunk in value.

While no one is arguing for India to remain aloof from the process of technological upgradation and modernization - it is unlikely that political and economic appeasement in the guise of globalization will do the trick for India. Unless India adopts a stance of hard bargaining and selectivity in the manner it globalizes, globalization will take place on the terms of the world's most powerful nations - and is unlikely to bring widespread benefits for the Indian people. It is therefore high time that the mantra of unrestrained globalization be questioned and challenged. The tall claims made by it's advocates need to be carefully scrutinized without the prevailing neo-liberal bias. The many failures, economic distortions and pitfalls of globalization need to be clearly exposed. Above all, India's economic policies need to be restructured to give an impetus to the local development of key technologies that play a crucial role in the modern economy and satisfy the most pressing needs of the vast majority of the Indian people.
http://india_resource.tripod.com/globalization.html

New $800 bn rescue for US economy
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Reuters
Posted: Nov 26, 2008 at 0910 hrs IST

New York The US Federal Reserve unveiled an $800 billion plan on Tuesday to buy mortgage-related debt and back consumer loans as it tries to revive the US lending market and steer the global economy away from a deep recession.
As the Fed announced its move, the United States posted the sharpest fall in gross domestic product since 2001, likely joining Europe in recession, while China's economy is now expected to grow next year at the slowest pace since 1990.

Mining company BHP Billiton's $66 billion bid for rival Rio Tinto became the latest corporate casualty of global economic turmoil, with BHP blaming the financial crisis and sliding metals prices.

The Fed's move is intended to strike at the heart of US economic woes, the collapsed housing market. The resulting meltdown in the high-risk mortgage market engulfed the world and caused the worst financial crisis in 80 years, freezing access to credit, sparking bank collapses and requiring the bailout of entire countries.

The latest actions mean the US government now faces a possible bill as high as $8.3 trillion from various programs to prop up the financial system, revive loan markets and rescue faltering companies. That is more than half last year's US gross domestic product, about $14 trillion.

President-elect Barack Obama announced his top budget officials on Tuesday and promised significant spending cuts to partially offset the costly stimulus package.

Under its latest massive life-support intervention for the US financial system, the Fed is planning a $600 billion program to buy mortgage-related debt and securities and a $200 billion facility to support consumer debt securities.

"This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved financial conditions more generally," the Fed said in a statement.

At the same time, Goldman Sachs sold a greater-than-expected $5 billion of bonds guaranteed by the US Federal Deposit Insurance Corp, a promising start for a government program approved last Friday that is aimed at loosening jammed credit markets.

'HEART OF THE PROBLEM'

Investors generally welcomed the Fed's latest move, although some worried that injecting more dollars into the financial system would spur inflation.

"They (the Fed) are getting to the heart of the problem," said Todd Abraham, co-head of government and mortgage bonds at Federated Investors in Pittsburgh.

"It's clean, it's quick, it's direct. It's a good way to bring down mortgage rates, because at the end of the day they have to stabilize the housing market," he said.

The Fed's move had an immediate effect on mortgage rates, showing some relief in consumer markets. The 30-year mortgage rate plunged about 0.75 per centage point to 5.5 per cent, according to Bankrate, Inc.

US large cap stocks ended higher after European and Asian stocks gained. Oil fell sharply to below $51 a barrel while the US dollar slumped against the euro and the Japanese yen.

Stocks of home builders and consumer lenders jumped, boosted by the Fed's support plan.

Global data and sentiment surveys confirmed the depth and breadth of the problems. The US economy shrank more severely during the third quarter than first estimated as consumers cut spending at the steepest rate in 28 years, according to a Commerce Department report.

It revised the annual rate of decline in third-quarter gross domestic product to 0.5 per cent from 0.3 per cent, the sharpest fall in GDP since the third quarter of 2001 when the Sept. 11 attacks against the United States took place.

"I think it anchors the beginning of the US technical recession," said Michael Woolfolk, senior currency strategist with Bank of New York-Mellon in New York. "It's likely to get worse before it gets better."

Prices of US single-family homes also plunged a record 17.4 per cent in September from a year earlier, according to a key index released on Tuesday.

Although China, the world's biggest consumer of many metals, this month unveiled a 4 trillion yuan ($586 billion) spending package to prop up its economy, growth would still likely slow to around 7.5 per cent in 2009, the World Bank said, which would be China's slowest growth rate since 1990.

Official data confirmed Germany is in recession for the first time in five years.

And falling consumer and business morale in Italy and France pointed to a continent heading for a prolonged recession, with a surprise tick up in consumer sentiment in Germany seen as an isolated and temporary blip.

The European Commission will propose on Wednesday measures to stimulate the recession-hit European economy including VAT cuts and a call for lower European Central Bank rates.

 

'US Govt didn’t get successor to Citi's Pandit'
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Agencies

New York/London Vikram Pandit may thank the TINA (There Is No Alternative) factor for still being in job as Citigroup CEO, as the US government reportedly did not push for his ouster in its rescue package for the troubled bank partly because there was no 'obvious' successor.
In the run-up to the federal rescue plan that guaranteed 306 billion dollars of toxic assets of Citi and multi-billion dollar capital infusion in lieu of shares, media was rife with the reports that Pandit was on the verge of losing his job as he had failed to deliver on the mandate to revive the bank.

A day after the mega rescue plan, it has now come out that the authorities discussed whether to replace Pandit as Citi CEO, but there was a disagreement over the issue.

A report from the US business daily ‘Wall Street Journal’, which has said that the name of American Express CEO Kenneth Chenault had emerged as a possible replacement, said that the federal officials had a disagreement on whether Pandit was at fault for the company's problems, while debating the structure of the rescue plan for Citigroup.

Separately, British daily the ‘Financial Times’ reported that the US regulators during their talks have decided against Pandit's replacement as they could not find an obvious successor for him.

The report quoted a participant from the discussions as saying that, "if there was an obvious choice for a replacement for the chief executive officer, that would have levered up the benefit of the package but there was no obvious queue of candidates."

Over the past week, media was agog with reports that Pandit was set to lose his job within a year of assuming the office, as he had lost the mandate for steering Citi out of its financial mess.

Further the WSJ report stated that, Pandit may not be in an immediate danger of losing his job as the government did not push for his ouster as part of the agreement, as it did with the CEO of American International Group when it bailed out that company.

Till a few weeks ago, Citi was being considered among the last ones standing in the world's biggest economic crisis in the recent times and Pandit was even being commended for successfully turning around the bank.

But a sharp plunge in its share price over the past week to below four dollars, which wiped off more than half of the company's valuation, re-ignited the concerns about the bank's financial health and reports started surfacing that the board and investors wanted Pandit out of his corner room.

A number of media reports suggested that Pandit was looking at selling the entire bank, or dis-assemble it into pieces to be sold out separately, in his efforts to revive the once-most-valued financial institutions of the world.

However, the state-sponsored bailout of the battered Citigroup has not only dispelled the doubts about the very existence of the financial services giant but also put to rest questions on the continuation of its India-born chief Vikram Pandit.

Easy credit comes back to haunt consumers
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Reuters
Posted: Nov 26, 2008 at 0854 hrs IST

New Delhi "Credit is a devil that dances in empty pockets," was the advice PV Rajiv's father gave him when the young salesman swiped his new credit card for the first time to buy an expensive watch he could hardly afford.
As someone whose generation was brought up on the virtue of thrift, Rajiv's father did not understand the culture of unfettered consumerism that has been one of the engines of India's stunning economic growth.

If Rajiv couldn't pay up front for a purchase, he used his card, until he exhausted his credit limit about six months ago.

"The outstanding is so high now that I am hardly able to pay the minimum due," said the 26-year-old, once the quintessential ambitious customer every bank targeted, hoping the offer of a credit card or loan for that dream car would prove irresistible.

With India's growth, an average of 8.6 per cent in the last four years, matched only by an expansive embrace of debt-fuelled consumerism among its growing middle-class, the country was a magnet for retail lenders.

But now as the global slowdown hobbles India's growth, while interest rates are still high, banks, companies and consumers are feeling the strain of rising debt.

According to latest central bank data, consumer credit growth in August slowed to 17.4 per cent from 21.4 per cent a year ago.

Housing loan growth slowed to 13.9 per cent in August from 17 per cent last year, while advances for consumer durables fell by 7.9 per cent from a year ago.

Car sales, a major indicator of the economy's health, fell an annual 6.6 per cent in October, the third decline in four months.

"There has been significant moderation in retail credit disbursal," Abheek Barua, chief economist of HDFC Bank, India's second largest private bank, said.

"Consumer credit has fallen in the past 6-7 months because of very high rates and with banks becoming more careful about any spike in non-performing assets."

PAYING FOR PAST EXCESS

Just a year ago things were very different.

According to Goldman Sachs, Indian consumers' growing appetite for cars, computers or clothes during the past eight years accounted for nearly as much growth in global demand as the United States, and triggered huge demand for credit.

Total loans, including mortgages and unsecured loans such as credit cards, grew around 30 per cent annually in the last three years, an expansion the central bank called "unprecedented".

But now the strain of the global slowdown is reflected in most banks raising their loan-loss provision, while overextended Indians find themselves in the whirl of revolving credit.

The largest among Indian private banks, ICICI, a major player in consumer credit markets, raised its bad loans provision to 1.91 per cent of net advances from 1.43 per cent a year ago. Retail credit is the biggest contributor to its bad loans.

According to ratings agency Crisil, a unit of Standard & Poor's, Indian banks' consumer loans are now likely to be major risk areas as bad debts are expected to rise to four per cent of advances by 2009.

Outstanding loans on credit cards stood at about $6 billion at the end of August, up a staggering 86 per cent from a year ago.

NO CHECKS, LITTLE SECURITY

Until about two decades ago a father would raise a loan from friends and family or take an advance from his retirement benefits to marry off a daughter or buy a house.

But as the economy opened up, credit providers distributed loans indiscriminately with little care for the credit-worthiness of the debtors – it became common to be accosted by credit card agents or offered a loan with virtually no demand for a security. "If you produce your plane boarding pass, you might be able to obtain a credit card as you exit the airport terminal," Manmohan Agrawal, executive director of Axis Bank, said in a Wharton School business report last year.

Defaults were bound to follow. Consumer credit repayments three months or more overdue form about 7-9 per cent of total loans outstanding this year, and, Crisil says, could touch 15 per cent.

India has about 30 million credit cardholders, a number that has tripled over the past five years as private and foreign banks chose plastic to break into the Indian market.

Indians put $14 billion on their cards in fiscal 2008, more than three times the amount charged four years earlier.

Last month, police broke open the door of a Mumbai apartment and recovered the bodies of AK Nair – both had swallowed poison – and their two dead children.

Police found 73 credit cards in the house.

The Nairs were not alone in their debt misery. In New Delhi alone, courts are dealing with about 400,000 cases of bounced cheques, mostly dishonoured payments for credit card purchases and loans, a national daily said.
 
Axis bares derivative harassment
OUR SPECIAL CORRESPONDENT
 
TROUBLE BREWS 
Mumbai, April 21: Axis Bank today admitted that two of its corporate customers had hauled it to court over losses arising from certain structured derivative transactions.

Axis became the first bank to admit that a problem was brewing with corporate clients over the exotic instruments that were sold earlier in the year which lost value dramatically after the market collapse in January.

The private sector bank — one of the first to come out with its fourth-quarter results today — has made contingent provisions of Rs 71.97 crore, which reflects the mark-to-market loss suffered by the specific customer.

Axis Bank has also provided $5.09 million towards depreciation in the value of a derivative instrument.

Mark-to-market is an accounting process by which the assets of an entity are recorded at their current market value. This value may differ from its purchase price.

As a result of the downturn in global financial markets, many companies have been forced to book losses on these exotic instruments — and are furious with the banks which advised them to make these investments.

Several companies first approached the Reserve Bank of India but failed to win any reprieve.

The situation was complicated after the Institute of Chartered Accountants of India instructed all auditors to book these transactions on a mark-to-market basis, which would dent the profits of companies.

Axis Bank, however, reported a net profit that was ahead of estimates.

Its net profit for the fourth quarter ended March 31, 2008, zoomed 71 per cent to Rs 361.40 crore over Rs 211.89 crore in the same period last year.

Net interest income also rose sharply by 89 per cent to Rs 828.43 crore.

The bank’s balance sheet size grew 49.58 per cent to Rs 1,09,577.85 crore as at end March 2008 from Rs 73,257.22 crore as at end March 2007.
 http://www.telegraphindia.com/1080422/jsp/business/story_9170134.jsp

Compensate customer for mental harassment, bank told
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Agencies
Posted: Nov 21, 2007 at 0000 hrs IST

Pune, November 21: A consumer disputes redressal forum in Pune has ordered a private bank to pay a compensation of Rs 1 lakh to a woman whose car was seized by its recovery agents for an alleged default in repayment of Rs 4 lakh loan.
The Additional Judge of the Forum S J Kshirsagar who delivered the order, on Wednesday said that the bank had been asked to pay the compensation to Renu Bhandwalkar within a period of 30 days.

Passing its order on Bhandwalkar's complaint, filed in September last year, the forum said the bank should pay the amount as a compensation for the ‘mental harassment’ caused to the borrower who had claimed that ICICI bank did not follow her instructions regarding recovery of loan installments from her savings account even though she had given post-dated cheques and had substantial deposits in the bank.

The complainant alleged that she had to approach court and police to take possession of the car fitted with laptop.

When it was finally returned to her by the bank's recovery agents, it was in a damaged condition, she claimed.

The respondent bank, during the forum hearings had refuted the claim of the borrower that she had left instructions to transfer her deposits to saving account in the event of insufficient balance.

Earlier also, the bank was asked to pay a compensation of Rs 55 lakh in a coercive recovery case by a court.
http://www.expressindia.com/latest-news/Compensate-customer-for-mental-harassment-bank-told/241800/

Report of the Working Group on Regulatory Mechanism for Cards 
(1) Introduction

In recent years plastic cards(credit, debit and smart cards) have gained acceptance and their use has become popular in the country. The total number of cards issued by 42 banks and outstanding, increased from 2.69 crore as on 31st December 2003 to 4.33 crores as on 31st December 2004. Like wise, the actual usage has registered increases both in terms of volume and value i.e. from 14.57 crore transactions amounting to Rs 26,951 crores during 2002-03 to 18.55 crore transactions aggregating Rs 35,870 crores during 2003-04.

In the current year up to December 2004 (April—Dec 2004) alone, card customers undertook about 21.19 crore transactions amounting to Rs 44,737.73 crores. In view of such a widespread use of cards, issues relating to the regulation of this payment mode as well as those relating to customer protection assume considerable importance. The functioning of the card payment system should not present any risks to the payment and settlement systems in particular and to the country’s financial system in general. Thus it was felt necessary to build an appropriate regulatory mechanism on payments by cards.

While building a regulatory oversight on the card payment system, we need to ensure it neither reduces the efficiency of the system nor it does in any manner stifle the growth of cards/ hampers card usage. However, cards represent an important financial service offering and they should work in the best interests of their users. Hence aspects such as terms of access, pricing, trade practices, and customer grievances redressal mechanism are very important.

In view of these aspects, the Governor of Reserve Bank, in his Mid-Term Review of the Annual Policy Statement 2004-2005 on the 26th October 2004 had announced the setting up of a Working Group for Regulatory Mechanism for Cards.

The terms of reference of the Working Group are as follows:

(a) To suggest the type of regulatory measures which are to be introduced for plastic cards (credit, debit and smart cards) keeping in mind the need to encourage their growth in a safe, secure and efficient manner.

(b) To recommend measures to be introduced to ensure that the rules, regulations, standards and practices of the card issuers are in alignment with the best customer practices.

(c) To draw a roadmap for setting up of a grievances redressal mechanism for the card users.

The list of members is furnished in the Annexure- 1

The Working Group met on five occasions. The Department of Information Technology and the Department of Payment and Settlement Systems of the Reserve Bank of India acted as the secretariat to the Group.

The Working Group invited two card companies, Visa and Mastercard, to share their international experience in the area of regulation and customer grievances redressal system. These companies made presentations on the subject and briefly discussed the issues with the members of the Working Group.

The Working Group also invited well known consumer rights protection activist Prof Manubhai Shah of Consumer Education and Research Society (CERS), Ahmedabad to discuss the issues relating to customer grievances and customer rights protection in the area of card payment system.

The Group also studied the developments with regard to card business and the institutional and regulatory arrangements in many developed countries.

Based on the study, discussions and the consensus reached, the Group submits its report and recommendations as follows:

(2) Current regulatory structure for cards

Banks in India having a networth of Rs 100 crores and above can undertake credit card business either departmentally or through a subsidiary company set up for the purpose. Prior approval of the Reserve Bank is not necessary for banks to set up domestic credit card business, the approval of concerned bank’s Board is sufficient for the purpose. Banks desirous of setting up separate subsidiaries for undertaking credit card business would require prior approval of the Reserve Bank. The Reserve Bank has laid down broad guidelines to card issuing banks regarding selecting customers, recovery of dues, sharing of information on card holders, fraud control, processing, transparency in fees etc.

Banks can introduce smart /on-line debit cards with the approval of their Boards, keeping in view the stipulated guidelines issued by Reserve Bank. While banks need not obtain prior approval of the Reserve Bank, the details of the smart /on-line debit cards introduced and copy of bank’s Board approval may be submitted to the Reserve Bank. Issue of off-line debit cards requires prior approval of the Reserve Bank, in view of the risk perception since it does not lead to immediate debiting of the customer’s account and use of such cards can lead to build up of large payables.

As at the end of December 2004, 42 banks undertook card business. While 24 of them are issuing credit cards, 30 of them issue debit cards and only 2 banks are issuing/ have issued smart cards. While earlier banks used to issue proprietary cards, the current practice is that the banks mostly issue cards under affiliation to international card companies like Visa, Mastercard, Diners Club and American Express.

Card business by banks is primarily governed by the rules, procedures, guidelines, terms and conditions agreed to between the card-issuing banks and the card companies. The relationship between card-issuing banks and the cardholders is governed by the set of terms and conditions of card issue and usage. The terms and conditions between card holders and card issuing banks vary depending on the bank and the type of credit card held.

Banks have developed their own policies on disclosure, customer grievance redressal, customer rights protection etc. While there is a certain magnitude of convergence on these matters, divergence of procedures and practices are also discernable. The practices followed by card issuing banks vary from bank to bank. Foreign and private sector banks are known to use more aggressive marketing methods, are more likely to outsource the work relating to selling of cards as well as collection /recovery work to private agencies, as compared to public sector banks.

(3) Customer service issues

The rapid expansion of the card usage in India merits regulation. The growth of this non-cash mode of payment should be in a safe, secure, efficient and customer friendly manner. In India the main areas of regulatory concern in this regard relate to the issue of customer service/ consumer protection. The Reserve Bank has been receiving a number of complaints regarding undesirable/ objectionable practices by credit card issuing banks/institution and their agents. They mainly relate to:

(i) Unsolicited and vexatious calls to members of the public by card issuing banks/ direct selling agents pressurising them to apply for credit card.

(ii) Communicating misleading/ wrong information regarding credit cards regarding conditions for issue, amount of service charges/ waiver of fees, gifts/prizes by DSAs

(iii) Sending credit cards to persons who have not applied for them / activating unsolicited cards without the approval of the recipient.

(iv) Not issuing credit cards to members of certain professions e.g. legal and police.

(v) Upgrading credit cards without knowledge of the credit card holders.

(vi) Charging very high interest rates /service charges.

(vii) Lack of transparency in disclosing fees/charges/penalties. Non-disclosure of detailed billing procedure.

(viii) Wrong billing

(ix) Not sending credit card statement in time to the customers.

(x) Delaying credit of cheques meant for credit card payments and then levying heavy penalties for defaults on customers.

(xi) Use of physical coercion/harassment/ intimidation by recovery agents appointed by card issuing banks.

(xii) Banks sharing confidential information about their customers to their credit card issuing subsidiaries/ other credit card issuing banks/ DSAs etc.

During the last few months the issue of customer grievances and setting up a suitable system to quickly and effectively redress the grievances has been discussed by the Reserve Bank of India with the senior officers of the card-issuing banks i.e. on 16th and 17th November as well as 24th December 2004.

More recently, Public Interest Litigations (PIL) have been filed in the Supreme Court and the High Court of Bombay on matters relating to unsolicited calls for marketing products and services and to the behaviour of sales and recovery agents who strong-arm tactics to effect recovery of dues.

The Group noted these developments and decided to study the international scenario and practices in the matter.

(4) Regulation of card payment schemes in other countries

In recent years world over card systems have been receiving focused attention of the regulators. (Details are given in Annexure 2). In general it is observed that card-based payment businesses in Asia, Australia, Europe and North America have been examined for their methods of determining interchange fees, exclusivity arrangements, no- surcharge rules, honour all cards rules, membership requirements and governance policies. The survey revealed that generally it is from the perspective of the competition and customer/consumer rights protection that the financial services including cards have been receiving attention and there are specific legal/statutory provisions. There are also institutional arrangements such as competition commissioners and customer/consumer fora. It is very rarely that banking regulators/supervisors have been entrusted with these responsibilities.

(5) Deliberations and Recommendations

(I) Regulatory framework

 

The Working Group studied the regulatory regimes for the credit card industry in various countries and found that the industry is mostly governed under competition /consumer protection/ fair trade practices regulations and or specific statutes relating to credit. The central banks or the banking regulators play mostly only a secondary role. International position based on the countries surveyed also shows that the emphasis is less on regulation, setting fees/ charges (left to the market dictates) and more on consumer rights protection and fair trade practices. Also in many countries many non-banks are also authorized to issue credit cards e.g Australia (specialist credit card institutions, USA (federal savings and loan associations, federal credit unions, finance companies) etc.

In India only banks /bank subsidiaries are permitted to enter the card payment business. Commercial banks in the country are subject to a stringent regulation system as well as a fairly robust supervisory system as compared to other financial intermediaries. It is felt that the present eligibility criteria for issue of credit cards are appropriate and do not warrant allowing access to non-banking entities in this business.

(II) Customer grievances/ rights protection

The Working Group deliberated major issues relating to customer grievances and rights under three heads. They are as follows:

A. Transparency and Disclosure

B. Customer Rights Protection

C. Code of Conduct

 

The Working Group deliberated on the need for customer rights protection/ customer grievances redressal mechanism for credit cards, debit cards and smart cards. The Group felt since debit cards in India are mainly on-line in nature, they present few risks and there are very few complaints regarding these cards while smart cards issued are very few in number, the focus of the deliberations of the Group should be mainly centered on credit cards, whose usage is widespread and with regard to which there are a very large number of customer grievances issues involved.

(A) Transparency and Disclosure

i. Transparency and Disclosure is an important issue, since there is often an asymmetry of information, both written and oral, between the provider of this financial service (card-issuing banks who have complete information) and user of the financial service (the card holders who very often do not have complete information on their rights).

 

ii. The Group noted that communication between the card issuing banks and their prospective customers / customers occurs through written and oral modes. Further, the communication occurs in different stages like marketing, application, acceptance (welcome kit), billing and during the entire relationship period.

 

iii. As regards written communication, the Group noted that while the card issuing banks do provide enormous information to their customers, many a times, the language used is legal terminology which is not easily comprehensible to ordinary customers; the written information is often printed in very small print hampering easy readability; crucial information is buried in a mountain of information; there are no standards in this regard among the card issuing banks. The Group therefore recommends that it is imperative that the terms and conditions for card issue and usage should be clear, in simple language comprehensible to a layman, prominently displayed, easily readable and the crucial items highlighted and accordingly the following standards are suggested.

a. The Working Group recognizes that for meeting their legal obligations and protecting their own interests, card issuing banks need to provide their customers with a complete set of the terms and conditions. However, from the view point of customer friendliness, the Group found that the practice of some banks to highlight certain important terms prominent to attract the attention of their customers is worthy of emulation by all card issuing banks. Accordingly the Group recommends that the Most Important Terms and Conditions (MITCs), as indicated in Annexure 3 should be highlighted and advertised/ sent separately to the prospective customer/ customer at all the stages i.e. during marketing, at the time of application, at the acceptance stage (welcome kit) and during billing and in subsequent communications.

b. The objective of the MITCs is to immediately draw the attention of the prospective customer/ customer to crucially important conditions, presented briefly in 2-3 pages. The MITCs would cover items like fees and charges, drawal limits, billing cycle, default termination/ revocation of card membership, loss/misuse of card and disclosure of information. The MITC should be printed in Arial format using font 12 for easy readability.

c. The card-issuer will however continue to send the document containing the normal terms and conditions as is being done now to meet the legal requirements.

d. The marketing brochures should invariably contain the financial terms and conditions in such a way that they command the attention of the cardholder/ prospective cardholder.

e. The Group recommends a standard list of terms and conditions which should feature in the MITCs as given in Annexure-3.

f. The Group noted that the current practice of banks to indicate the interest rates applicable to the card holders for rolling over of outstanding amounts and other related facilities on monthly basis can be misleading for ordinary customers, as their full implication may not strike them easily. The Group, therefore, recommends that the card-issuing banks will clearly mention the interest charges, on an annualised basis, in all communications to the card holder, including at the application stage. The card-issuing bank may continue to mention the monthly interest charges in addition to interest charges on an annualised basis.

 

iv. As regards transparency in oral communication between the card-issuer and the prospective customer/ customer, the Group noted that the general complaint is about lack of transparency on the part of the officials/ employees of the card issuing banks as well as their direct selling agents (DSAs)/ direct marketing agents (DMAs). While marketing their products over telephone or during personal visits, they are alleged to give incomplete/incorrect information to the prospective customers, highlighting their attractive features, while not mentioning certain unattractive, but important aspects of the products on offer. This presents a distorted picture of the terms and conditions of the products on offer. These practices in effect prevent the members of the public from making an informed decision in the matter. The Group therefore recommends that

a. the persons entrusted with the responsibilities of product marketing should exhibit a high degree of professionalism and integrity in their work,

b. the DSA/ DMA arrangements, if resorted to, should be entrusted to well known firms or firms on whom proper and adequate due diligence has been applied. Also it is the responsibility of the card issuing bank to see where cards are issued through DSA/ DMA mode, the Know Your Customer (KYC) norms laid down by the Reserve Bank of India are scrupulously followed.

c. the staff, of both the banks and their DSA/DMAs should be properly briefed and trained in order to handle their responsibilities, particularly in areas like polite conversation, hours for calling, privacy of customer information, conveying the correct terms and conditions of the product on offer etc.

d. Card-issuing banks would introduce a comprehensive Code of Conduct for their DSAs/ DMAs and suitably penalize those firms which violate this Code. It is understood that IBA has already formulated a Code for the DSAs and the card issuing banks should adopt the code expeditiously. Serious and continued violations should result in termination of the contract between these banks and the concerned firms.

 

(B) Customer Rights Protection

In the wake of fast growth of the card business, certain infringement of the rights of the card customers has been observed. These basically relate to rights of customers with regard to their privacy, privacy of information and agreement. There was a general consensus in the Group that these rights are non-violable and therefore should be protected. Further, the Group also agreed that as responsible institutions in the financial services area, the card issuing banks will have to exercise voluntary restraints in exercising their own marketing rights, In addition, they should also show exemplary conduct in helping the customers to enforce the latter’s rights. Accordingly, the Group recommends as follows:

i. The Right of Privacy of Information

 

Various aspects relating to the Right to Privacy of Information of the customer were discussed by the Group which shared the concern regarding the release of the customer information to the third parties. After deliberations, the following consensus was arrived at:

a. At present the card-issuing banks obtain the consent of the card holder at the outset which authorizes them to disclose any information to third parties. Hence by default the card-issuing banks obtain this right carte blanche. The Group, therefore, recommends that henceforth the card-issuing banks will btain the specific approval of the cardholder regarding the information which the former can release to third parties.

b. The card-issuing bank may be permitted to release information regarding the credit history/ repayment record of the cardholder to the credit information bureau and collection/ recovery agent (in case of default) without the approval of the card holder. The card issuing banks will release customer information to the collection/ recovery agents (only in case of default) only to the extent that will enable the latter to discharge their duties. Personal information if provided by the card holder, not required for recovery purposes, will not be released by the card issuing bank.

c. In addition any information sought by courts or statutory bodies, may be released by the card-issuing banks in discharge of their legal/ statutory obligations.

d. The card-issuing banks will have to obtain the specific approval of the cardholder for releasing any information for any other purpose including business/marketing purpose i.e. to subsidiaries / affiliates, to business partners in case of co-branded cards etc. While obtaining the specific approval the card issuing banks will have to specify the purposes for which the information can be used.

e. The card-issuing bank will ensure that their respective DSAs/ DMAs do not unauthorisedly transfer or misuse any customer information obtained by them during marketing of the card products and subsequently held by them in their records.

 

(ii) Telemarketing

The Group noted that in recent times there have been increasing complaints regarding people being disturbed, often at odd hours, by persistent calls from Direct Sales Agents(DSAs)/ Direct Marketing Agents(DMAs) as well as from the banks’ call centres offering various card products. These unsolicited calls have been seen as serious invasion of privacy of individuals. These calls are received both on cellphones and landlines. Public Interest Litigation (PIL) has been filed in the Supreme Court against unsolicited calls from such agencies. The issue was discussed at great length by the Working Group. While it was felt that it may not be advisable to ban all calls by telephone/ cellphone for the purposes of marketing, since this is an important marketing tool and a number of people (both existing and potential customers) are in favour of receiving calls regarding new products/ information update on existing products, for the members of the public who did not wish to receive such calls a mechanism has to be introduced to protect their privacy.

The Group therefore recommends as follows:

a. all card-issuing banks should maintain a ‘Do Not Call Registry’ which will have the phone numbers(both cell phones and telephones) of customers as well as non-customers (non-constituents of the banks) who have informed the respective banks that they do not wish to receive unsolicited calls for marketing purposes.

b. The intimation for inclusion of a person’s telephone number in this registry can be facilitated through a website maintained by banks for this purpose or by a letter from such person addressed to the bank.

c. The banks should introduce a system whereby their DSAs/ DMAs as well as their call centres would have to first submit to the banks the list of numbers they intend to call for marketing purposes and the banks would be obliged to refer to the ‘Do Not Call Registry’ numbers and only numbers which do not figure in this registry would be cleared for calling.

d. The numbers cleared for calling would only be accessed. Card–issuing banks would be held responsible if a ‘Do Not Call’ number is called by either their respective DSAs/ DMAs or their respective call centres.

e. The banks should also ensure that the information relating to the numbers on their’ Do Not Call Registry’ is neither divulged to unauthorized persons nor misused in any manner.

 

The Group also noted that a mechanism had to be provided for persons who did not wish to be disturbed by marketing calls from any bank and did not want to individually intimate all the card-issuing banks (a mammoth and time consuming task) to this effect. To take care of this problem, the Group recommends as follows:

f. The Indian Banks Association (IBA) would set up a web-site where such persons could register their phone numbers.

g. The IBA, periodically and in a confidential manner, should circulate the contents of their ‘Do Not Call Registry’ to the card-issuing banks.

h. The card-issuing banks would be responsible to ensure that the listed numbers on this registry are not called, information not divulged to unauthorized persons and not misused in any manner.

 

(iii) Mechanisms for Arbitration

At present, in case a cardholder has a dispute/ grievance with a card issuing bank which cannot be resolved/ addressed, the recourse for him or her is either to approach the consumer court or the civil court. This recourse may be expensive and time consuming. In view of the increasing number of complaints against card issuing banks it was felt that there should be a body which is able to quickly resolve the dispute/ address the grievance with minimum cost.

The Group therefore recommends as follows:

a. The Banking Ombudsman who is looking into issues relating to deficiencies in service in the banking area and also attending to customer service issues could be the appropriate authority to arbitrate in credit card disputes between card holders and card-issuing banks.

b. Necessary regulations be suitably amended to bring the card–issuing subsidiaries of banks within the ambit of the Banking Ombudsman’s jurisdiction.

c. The Banking Ombudsman be provided with sufficient and suitably trained staff as well as adequate infrastructure to deal with such cases.

 

(iv) Unsolicited cards

There are rising number of complaints regarding receipt of unsolicited cards by members of the public from banks. Without securing the approval of the concerned person and without communicating the terms and conditions of that card product, the cards are activated and the customer billed for joining fees / annual membership charges. Such cases result in harassment to members of public who do not wish to avail of the product on offer. Quite often the unsolicited cards are pre-activated, which in addition to invasion of privacy presents a risk to the recipient in case it falls into the hands of an unauthorized person who misuses it and the intended recipient is billed for the amount spent by the unauthorized person. At times it becomes very difficult for the intended recipient to convince the card-issuing bank that he or she had not received the unsolicited card and hence had not used it. In fact it is illegal in certain countries like USA to send a credit card to a person unless that person has applied for the same or agreed to receive one.

The Group therefore recommends that

a. unsolicited cards,, should not be issued to any non-customer.

b. In case an unsolicited card is activated by the card-issuing bank without the approval of the recipient and the latter is billed for the same, the card-issuing bank will not only immediately reverse the charges but will pay a penalty without demur to the recipient of the card amounting to twice the value of the reversed charges.

 

(v) Insurance cover for card outstandings in case of death of card holder

The Working Group discussed the difficulties faced by family / relatives of the card holder in case of death of the card holder who left behind card outstandings. The family/ relatives of the deceased card holder in addition to coping up with their bereavement had to arrange to clear the dues of the deceased card holder.

The Group recommends that as a consumer rights protection measure, the card-issuing banks would offer all their card holders a group insurance policy to cover their card payables. In case of the death of the card holder the card payables, to extent of the cover, would be paid off by the insurance company. The premium for this insurance cover (known as credit shield by some card-issuing banks) would be paid for by the card holder.

C. Code of Conduct

 

(i) Law to regulate card payment system

The Working Group deliberated on the need to have a separate law to regulate the card payment system. The Group is of the view that this requires detailed deliberations also by parties beyond the purview of the regulatory jurisdiction of the Reserve Bank.

However, the Group felt that cards in India are either issued or jointly issued (in case of co-branded cards) by banks. The banks are subject to the regulation by the Reserve Bank of India and hence the Group recommends that the Reserve Bank may, for the time being, place appropriate regulatory structure as envisaged in this report.

(ii) Self Regulatory Body

 

The Working Group recommends that card-issuing banks should consider setting up a Self Regulatory Body on the lines of IBA, FIMMDA, FEDAI etc to deliberate on the issues of common interest affecting all card-issuing banks. This body would be in constant dialogue both with its members and the regulator regarding issues like minimum technical and operational standards, security of cards/protection against frauds, customer service, customer grievances redressal mechanism etc.

(iii) Code of Conduct

The Working Group discussed the need for the card-issuing banks to set certain norms and standards for customer service and protection of consumer rights. However, the Group noted that as per the Reserve Bank’s recommendation, the Indian Banks Association (IBA) has set up a Committee to introduce a Code of Conduct for the card-issuing banks in the country. It is understood that the IBA Committee has already formulated a Code for the DSAs. The Group noted that there is no justification to duplicate the efforts of the Committee. It therefore recommends that the card issuing banks may adopt and conform to such a Code when made available by IBA. The introduction of a Code of Conduct by card issuing banks for their DSAs/DMAs has already been recommended under(I) A (iv) (d).

(6) Conclusion

The Group submits that the card industry will emerge as a crucial component of the payment systems in India and has immense potential to facilitate non-cash transactions in a disciplined manner. The Group therefore concludes that the card industry needs to be nurtured, of course within the ambit of customer convenience and rights.

 

R Gandhi
(Chairman)

K.V.Subbarao
(Member)  Shekhar Bhatnagar
(Member)  M.K. Samantaray
(Member) 
J.S.Marfatia
(Member)  Soundara Kumar
(Member)  A.Muralidhar
(Member) 
Murali.M. Natrajan
(Member) Pralay Mondal
(Member) V.Vaidyanathan
(Member) T.R.Ramachandran
(Member)

Mumbai 1
8th April 2005

--------------------------------------------------------------------------------

Annexure-1

Members of The Working Group

Sr No:
 Name (S/Shri/Smt) Designation Organisation
 

1
 R. Gandhi
(Chairman)  Chief General Manager In- Charge, Department of Information Technology
(Presently Regional Director for Andhra Pradesh, Hyderabad)
Central Office  Reserve Bank of India
 
2.  K.V. Subbarao Chief General Manager, Dept of Banking Supervision, Central Office  Reserve Bank of India
3. Shekhar Bhatnagar  General Manager, Dept Of Non-Bkg Supervision, Central Office  Reserve Bank of India
4. M.K.Samantaray General Manager, Dept Of Bkg Operations And Development, Central Office  Reserve Bank of India
5.  J.S. Marfatia Vice-President  Indian Banks Association
 
6.  Ashok Mukand
(Till 13-3-2005)  Chief General Manger, Personal Bkg Central Office  State Bank of India 
 Smt Soundara Kumar
(W.E.F 14-3-2005)  General Manager, Personalbkg Central Office 
State Bank Of India
 
7. A. Muralidhar  General Manager, Head Office  Andhra Bank
8. Murali.M.Natrajan Regional Head, Consumer Bkg  Chartered Standard Bank
 
9. V. Vaidyanathan Sr. Manger,General Retail Bkg  ICICI Bank 
10. T.R.Ramachandran Vice President & Business Mgr, Credit Cards  Citibank 
11. Pralay Mondal Sr.Vice President & Head Credit Cards HDFC Bank

Invitees

1. Prof Manubhai Shah Chairman Emeritus Consumer Education & Research Centre Ahmedabad
 
2. Santanu Mukherjee Country Manager South Asia  Visa Consolidated SupportServices (I) Pvt Ltd
 
3. Nitin Gupta Country Manager South Asia Mastercard International (Sa,Me&Af Reg)
 
4. S.Ganesh Kumar General Manager, Dept Of Information Technology, Central Office  Reserve Bank of India 

 

Secretariat

1.  Arun Pasricha  General Manager Dept Of InformationTechnology, Central Office  Reserve Bank of India 
2.  G. Raghuraj Asst.Gen Manager, Dept Of Information Technology, Central Office Reserve Bank of India
 

 

 

 

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Annexure 2

Regulation of card payment schemes in other countries

Consumer protection laws in Australia require transparency of product terms and conditions and provide a complaints resolution mechanism for consumers who believe that the stated terms and conditions have been breached. Federal and state consumer affairs ministries have powers to resolve disputes by negotiation or arbitration, to commence civil litigation and to recommend prosecution for serious breaches. General competition law prohibits ‘misleading and deceptive conduct’ which includes the making of misleading or deceptive statements. Recently, the Payment System Board undertook a comprehensive evaluation of the regulations of the credit card schemes to improve competition and efficiency as well as further public interests. The reform measures covered aspects like merchant pricing and removed the restrictions imposed by international credit card schemes. The aim of this reform was to reduce the average interchange fees charged and objectively calculate the costs incurred in interchange transactions. The reform aimed at liberalizing the existing barriers to entry to designated credit card schemes for non-financial institutions. The new regime involved the creation of a special class of authorized deposit taking institutions (ADIs), known as specialist credit card institutions to be authorized by the Australian Prudential Regulation Authority(APRA) to conduct only credit card business. These specialist credit card institutions would be required to maintain higher minimum capital ratio than a traditional ADI reflecting their concentration of risk in one business line. The APRA issued prudential guidelines on risk management of credit card schemes. The Australian Payment Systems Board has also examined issues in the area of debit cards like charging of interchange fees for EFTPOS transactions.

In Canada the Financial Consumer Agency of Canada (FCAC) was founded in 2001 under the Financial Consumer Agency of Canada Act to consolidate and strengthen oversight of consumer protection measures in the federally regulated financial sector and to expand consumer education. As a federal regulatory agency, the FCAC is responsible for enforcing many of the federal laws that protect consumers in their dealings with financial institutions. The FCAC reports annually to the Canadian Parliament on its activities and the degree to which financial institutions are meeting their obligations. The FCAC reviews hundreds of compliance cases involving a broad range of consumer issues under federal financial institution legislation. The FCAC has dealt with violation in credit card regulations like failure to disclose information regarding the time interest accrues, calculation of interest, grace period etc, failure to disclose information relating to rate of interest in advertisement or application, failure to provide information in monthly statement when payments were credited to credit card account and failure to disclose amendment to required information in credit card agreement.
In the European Union, the Competition Directorate of the European Commission in July 2002 announced a settlement with Visa, whereby the card company would reduce interchange fees gradually over five years and also keep them below a cap that will be calculated each year on the basis of card issuers’ costs. A Regulation in 2001 had decreed that the banks have to charge the same customer fees for domestic and cross-border payments(credit card). A deadline has been laid down which decrees that national and cross-border transactions should be treated identically by 2010. In March 2003 the European Payments Council (EPC) made certain recommendations which were agreed to by the Cards Working Group. These recommendations deal with issues like a common approach to tackle frauds, domestic/ international card issuers to present their tariff structures to member banks in a transparent manner, self-regulation by card issuing banks as well as cooperation with legislatures.

The consumer credit laws and regulations in France are very comprehensive. These measures are incorporated in the Consumer Code which has been reinforced by the Emergency Economic and Financial Measures Act 2001 and the Financial Security Act of 2003. The scope of the laws and regulations is vast since they cover every credit transaction (along with guarantees) for amounts up to 21,500 euros. Decrees lay down the method of calculating the Annual Percentage Rate (APR) which is required to include all the direct and indirect costs. The Financial Security Act 2003 stipulates that credit institutions should in their advertisements use language which is easily understood and information regarding interest and other charges should be clearly mentioned. The preliminary loan offer should be kept separate from any advertising medium/document and there are safeguards to ensure that advertisements do not imply that credit would be advanced without ascertaining the borrower’s financial condition. The French Civil Code lays down the procedure to be followed in case of default and the penal interest payable by the defaulter. The Financial Security Act 2003 has provisions to prevent accumulation of excessive debt through better information on revolving credit and increased disclosure requirement. In terms of the Consumer Code a lender who grants a loan without providing a preliminary loan offer which does not meet the requirements of the Code will be deprived of the right to charge interest i.e. the borrower gets an interest-free loan. It is the Bank Card Consortium (CB) set up in 1984 made up of 150 members that is responsible for setting standards for cards issued by its members and ensures the security of the entire system of issuing and acceptance of cards. The Everyday Security Act of 2001 set up the Observatory for Payment Card Security, which is chaired by the Governor of the Banque de France consists of members of Parliament, issuers of cards, representatives of government departments, retail and consumer organizations. It is a forum for dialogue and its main tasks are measures to enhance payment card security, compile fraud statistics and keep a watch on technology for combating frauds using technology.

In Singapore, card issuers are required to comply with the rules and regulations issued by the Monetary Authority of Singapore regarding the operation of credit/ charge cards in that country. These relate to disclosure of terms and conditions both during sales/marketing as well as on dispatch of cards (relating to service charges, finance charges, late payment fees, cash advance charges, minimum monthly payment, repayment grace period, balance computation method etc) annual membership fees, lost/stolen card liability security of cards, theft/ loss of cards, offering of gifts, prizes, discounts etc, unsolicited cards, customer enquiries and the setting up of consumer mediation unit within the card issuing institutions to handle customer complaints. The Code of Practice for Banks in Singapore drawn up by that country’s Association of Banks (ABS) places a lot of emphasis on resolution of disputes between banks and customers and has directed its members to set up an elaborate machinery both within and outside the bank for resolution of disputes, including facility for mediation by third parties.

In South Korea the credit card market grew dramatically from 1998 due to a variety of incentives and tax breaks offered by the government (to reduce cash economy and tax avoidance). The government has regulated the credit card interest rates as well as the quantum of cash advances which can be given and also has imposed regulations on operations and pricing.

In the United Kingdom, an independent organization, Office of Fair Trading (OFT) set up under consumer and competition laws plays a leading role in helping consumers understanding their rights, protecting consumer interests and enforce competition laws. The OFT set up by the government, also promotes good practices in businesses by granting ‘approved status’ to Consumer Codes of Practice that meet and carry out set criteria. The OFT regulates card business under laws like the Consumer Credit Act 1974, Competition Act 1998 etc. The OFT has directed many credit card companies not to advertise introductory interest rates as APRs, as advertising a temporary interest rate as an APR is misleading and incorrect, since the APR should measure the overall charge for credit including interest and other charges over the lifetime of the agreement.

In the U.S.A. between 1996 and 1998, anti-trusts suits have been filed against honour all cards and exclusivity rules. In USA, the Congress passed the Fair Credit and Charge Card Disclosure Act in 1988 to ensure that the consumers receive detailed and uniform disclosures of rates and other cost information relating to credit and charge card accounts. To implement this law, the Federal Reserve Bank amended its Truth in Lending Regulation (Regulation Z), which is designed to help consumers know the cost and terms of credit and reveal all related information in a clear, easy to read and easy to compare manner so that consumers can make an informed choice while selecting cards. Similarly the sharing of financial information with other members of the financial group and other businesses is strictly regulated in USA . The Graham-Leach-Bliley Act of 1999 which came into effect from 1st July 2001, limits the transfer of personal financial information, balancing the right to privacy of the customers with the need of financial institutions’ need to share information for normal business purposes. Under this law the financial institutions are required to disclose the kinds of information that may be shared. The customers can decide under the ‘privacy notice’ whether they are comfortable under the information sharing arrangements. The financial institutions are required to disclose how they will protect the confidentiality and security of the customer’s information. The Fair Credit Reporting Act in USA clearly lays down the information which the financial institution can share even if the customer declines i.e. for normal business, to protect against fraud and unauthorized transactions, in response to court orders, what is publicly available and where information is required to be given for joint marketing agreement where two or more institution jointly sponsor the same product/ service. The US Fair Credit Billing Act allows non-application of finance charges for wrongly billed amounts and stipulates that the card–issuing institution sends full explanation and statement of amounts owed in response to all complaints of wrong billing. The US Congress passed the Fair Debt Collection Practices Act 1996 which lays down procedures to be followed by debt collectors in locating the debtor, method and time of contacting the debtor, not subject the debtor to harassment, oppression and abuse and not use intimidation or misrepresentation to collect debt. There are strict stipulations for the debt collectors in carrying out legal actions against debtors and the debt collectors are liable to civil liability in case they violate the law. The Federal Trade Commission and other regulatory bodies are charged with enforcing the provisions of this law.

 

--------------------------------------------------------------------------------

Annexure - 3

List of Most Important Terms and Conditions(MIT&C)

(a) Fees and charges

1. Joining fees for primary card holder and for add-on card holder
2. Annual membership fees for primary and add-on card holder
3. cash advance fee
4. Service charges levied for certain transactions
5. Interest free (grace) period
6. Finance charges for both revolving credit and cash advances
7. Overdue interest charges—to be given on monthly and annualised basis
8. Charges in case of default

 

(b) Drawal limits

1. Credit limit
2. Available credit limit
3. Cash withdrawal limit

 

(c) Billing

1. Billing statements—periodicity and mode of sending
2. Minimum amount payable
3. Method of payment
4. Billing disputes resolution
5. Contact particulars of 24 hour call centres of card issuer
6. Grievances redressal escalation—contact particulars of officers to be contacted

 

(d) Default

(1) recovery procedure in case of default

(2) recovery of dues in case of death / permanent incapacitance of card holder

(3)available insurance cover for card holder and date of activation of policy

(e) Termination / revocation of card membership

1. Procedure for surrender of card by card holder—due notice

 

(f) Loss/theft/misuse of card

1. Procedure to be followed in case of loss/ theft/ misuse of card- mode of intimation to card issuer
2. Liability of card holder in case of (1) above

 

(g) Disclosure

1. Type of information relating to card holder to be disclosed with and without approval of card holder

 

Disclosure of MIT&C

Stage Items to be disclosed

(i) during marketing Item nos: a

(ii) at application Item nos: a, e(2), and g

(iii) welcome kit Item nos: all items from a to g

(iv) on billing Item nos: a, b and c,

(v) on an ongoing basis any change of the terms and conditions

Note

i. the font size of most important terms and conditions should be minimum 12 (ariel format)

ii. the normal terms and conditions communicated by the card issuer to the card holder at different stages will continue as hitherto.
http://www.rbi.org.in/scripts/PublicationReportDetails.aspx?FromDate=04/23/2005&SECID=21&SUBSECID=0
 
 Fine of Rs. 55 Lakhs slapped on ICICI Bank for using goons
By Neelima Shankar
Nov 6, 2007
            
 
New Delhi: The largest private sector bank in India, ICICI Bank has been taken to the task by Consumer Disputes Redressal Commission of Delhi. It has slapped a whopping Rs. 55 Lakhs as fine on the apex bank for employing goons to recover the loan amount from a customer.

 

The Commission took this drastic step after receiving complaints from one Tapan Bose and his friend's son Vinod Choudhary. Vinod was beaten up by the recovery agents black and blue and a loaned car was snatched from him. He was admitted to the hospital in a serious condition. The consumer court found ICICI Bank guilty of 'unfair trade practice' and instructed the Delhi Police to register FIR against all such complaints.

Commission's President Justice JD Kapoor said, "No civilized society governed by rule of law can tolerate such kind of conduct." Such unruly method of loan recovery was also termed as 'human right violation' and the commission took strong exception of the reckless and brutal ways adopted by the recovery agents while showing utter disregard for any law of the land.

ICICI Bank tried to hush up the matter by claiming that the recovery agents were not its direct employees and the whole process had been 'outsourced' hence it can't be held directly responsible for the act. However, the commission quashed the bank's argument and said, "For every illegal acts of the collection agency, the bank is directly liable. The consumer had no concern with the internal agreement between the bank and any other agency and they could not be made to pay the price for it. There is a civil legal remedy for recovering loans and employing goons for this was a beyond the parameter of the law."

This judgment came few days after the RBI had expressed its dissatisfaction regarding the loan recovery methods and had warned the banks to behave. Of late there have been many incidents of borrowers being harassment by loan recovery agents. These have led to many suicides, the most notable being that of Prakash Sarvankar, which had forced the ICICI Bank to announce an ex-gratia payment of 15 Lakhs to the victims relatives.

RBI is going to announce comprehensive guidelines to banks regarding the recruitment and conduct of loan recovery agents. The steps expected are extensive background checks for such agents, making recovery calls from a single number, police verification of the recovery agents, prominent display of recovery agent used by banks on their websites and quick registration of complaints against any harassment by loan recovery agents. Keeping in view the strict stand of RBI, State Bank of India (SBI), the largest public sector bank in India has decided to recruit around 3000 loan recovery officers.
 http://www.rupeetimes.com/news/car_loans/fine_of_rs_55_lakhs_slapped_on_icici_bank_for_using_goons_1157.html

  ICICI faces RBI heat over recovery
 
Press Trust Of India / New Delhi November 21, 2007
 The banking regulator, Reserve Bank of India, has warned the country’s largest private sector bank of stern action in case incidents of coercive methods by recovery agents of the bank recur, the Rajya Sabha was informed today. 
 
“ICICI Bank was advised by RBI in October that if such incidents recur in future, the regulator would be constrained to take stern action,” Minister of State for Finance P K Bansal told the House in a written reply. 
 
Earlier, in view of the alleged harassment of customers by ICICI Bank’s recovery agents and the Supreme Court judgement, the bank was advised by RBI in August to investigate and take action against the recovery agents involved. 
 
The bank was also advised to look into the system of appointing and reviewing performance of recovery agents and undertake comprehensive review of customer complaints at the highest levels. 
 
Bansal said the apex bank has reported that the customer who had availed the car loan from ICICI Bank filed a case under Section 308 (attempt to commit culpable homicide) of the Indian Penal Code with the IP Estate Police Station in New Delhi, under which three executives of the possession agency were arrested but were later released on bail. 
 
On November 2, the Delhi State Consumer Commission has imposed “punitive damages” of Rs 50 lakh on ICICI Bank for alleged use of force and coercive methods by some recovery agents of the bank to take possession of the vehicle financed by the bank, Bansal said. The Commission also ordered the bank to pay Rs 5 lakh as compensation to the complainant. 
 
To another question, Bansal said the government has not received any proposal from RBI to bring Lender Liability Bill to fix lending terms and conditions for cracking down on unfair recovery means adopted by some private banks in the country. 
 
The guidelines issued by RBI clearly stipulate that the banks would be responsible for all acts of omission and commission of their agents, Finance Minister P Chidambaram said in the house in reply to another question. 
 
RBI reserves the right to impose penalty on a bank for violation of guidelines under the provision of Banking Regulation Act, 1949. 
 
The regulator takes up the complaints with the concerned banks and cautions them to ensure that such incidents do not recur in future, the finance minister said. 

HDFC Bank Complaints - Harassment by the recovery department!
Review all HDFC Bank complaints
HDFC Bank
Posted: 2007-12-19 by Tarun Bhatia [send email]
Harassment by the recovery department!
I am a saving salaried A/C holder in your bank under A/C No. 1681050065839, Yesterday when I was an urgent need of money went to your bank ATM, It was shocking that even though my account showed a good amount of balance the required amount still I was not able to withdraw due to reason not known to me.
When I tried to solve the same to your Bank Customer Care Executive, The reply I got was even horrifying that my money was put hold by my previous company.
How can bank hold my money on any body’s instruction & without any knowledge.
Please do the needful to solve the same as earliest, Otherwise I may have to take a legal action
Awaiting your affective reply.

Thanks
Yours faithfully,

Tarun Bhatia,
+91-9899836115
http://www.consumercomplaints.in/complaints/harassment-by-the-recovery-department-c24796.html

Outgunning the goons
Thanks to a recent Supreme Court ruling condemning harassment for loan recovery, consumers can now hope to receive fair treatment at the hands of banks. V. Kumara Swamy reports
 
Left in the lurch: This family in Calcutta was evicted from their home by loan recovery agents 
Tapas Kumar Deb, a Calcutta resident, recently filed a police case against the loan recovery agents of the State Bank of India Card and Payment Services. Deb claims that after paying an equated monthly instalment (EMI) for six months on a loan of Rs 58,000 as per the agreed rate, he was suddenly told that he would have to pay a lot more to clear his loan. Even after repeated enquiries, the bank did not give him any explanation for this. Then, when he stopped paying the EMIs and wanted to clear his loan, the recovery agents began to harass him day and night.

In another incident last month, Manabendra Mondal, a north Calcutta transporter who had taken an auto loan from the State Bank of India and had defaulted on three EMIs, committed suicide after being harassed and insulted by the bank’s recovery agents.

These incidents are not isolated cases. With the rise in the disbursement of personal and other loans by banks and other financial institutions, hooliganism and strong-arm tactics by loan recovery agents have become common. But the consumer need no longer bear this kind of harassment and humiliation in silence. Both the National Consumer Disputes Redressal Commission (NCDRC) as well as the Supreme Court have laid down that such behaviour on the part of recovery agents is utterly unlawful and needs to be prohibited.

Recently, in the case of ICICI Bank vs Prakash Kaur, the Supreme Court ruled: “We are governed by the rule of law in the country. The recovery of loans or seizure of vehicles can be done only through legal means. The banks cannot employ goondas to take possession by force.”

The NCDRC has been no less categorical in condemning the extreme methods adopted by loan recovery agents. In July this year, in the case of Citicorp Maruti Finance Ltd vs Vijayalaxmi, the NCDRC stated, “On occasion, the borrower suffers harassment, torture or abuse at the hands of the musclemen of the money lender. Such behaviour is required to be prohibited and the process of repossession is required to be streamlined so as to fit a civilised society. Let the rule of law prevail and not that of the jungle where might is right.”

In May 2000, Vijayalaxmi, a postal department employee in Delhi, had taken a car loan from ICICI Bank that was to be repaid in 60 EMIs. After three years of regular payment, she could not sustain the payment cycle as her husband had an accident in this period. The dreaded recovery agents soon began to appear regularly at her doorstep. She ultimately agreed to make a final settlement.

“But even before we could pay the settled amount,” says Ganesh Kumar, her husband, “our car was forcibly taken away from us by a group of recovery agents in May 2003. The strangest thing was that even though the bank was negotiating with us for the release of the vehicle, it had already sold the car to someone else.” The couple finally got justice from the NCDRC which upheld the decision of the lower consumer courts and ordered the bank to pay them compensation.

The recent rulings of both the Supreme Court and the NCDRC ought to be a shot in the arm for harassed borrowers. “The activities of recovery agents are a clear violation of not only the Supreme Court’s order but also of the Reserve Bank of India’s code of conduct,” says Arun Saxena, president, International Consumer Rights Protection Council, a Mumbai-based non governmental organisation.

The RBI’s “Fair Practices Code” for lending states that banks should not resort to methods like persistent harassment of borrowers or the use of muscle power to recover loans.

While agreeing that excesses do occur in some cases, most banks stress that they are trying to improve the loan recovery system. According to B. Madhivanan, head, customer service, ICICI Bank, it is only when the bank feels that the intent of the defaulter is suspect that it approaches a recovery agency. “When customers give false information like a wrong address or misleading employment information and when their cheques bounce, we ask for the help of a collection agency,” he says.

Much of the problem of undue harassment lies in the fact that most banks outsource the job of loan recovery to private recovery agencies. These agencies often employ people who are happy to intimidate and terrorise defaulting borrowers. “But we in the industry are tightening the screws,” assures Madhivanan. To check loan recovery hooliganism, banks are now insisting on police verification of agents, asking agencies to employ people who can negotiate and adhere to a code of conduct and also slapping heavy penalties against erring agencies.

However, more often than not, “bad loans” are a result of the complicated agreements that loanees are made to sign by banks. “The language is so heavily in favour of the company and so vague that a customer has almost no say. If we go by the NCDRC and Supreme Court judgements, these agreements are illegal,” says J.K. Mittal, a Delhi-based consumer lawyer.

Of course, banks too have a genuine problem on their hands when they have to deal with defaulting borrowers who have no intention of paying. “You have to listen to some of the recordings of our telephonic conversations with loan defaulters. They challenge us to do anything we want to and threaten us, saying that they are going to lodge false harassment cases against us,” says Madhivanan.

But as a consumer you have the right to receive fair treatment even if you have defaulted on paying your EMIs. If you have a temporary problem, try and meet the manager of the bank directly and explain the situation. It is advisable to go with documentary evidence and maintain a written record of all your interactions with the bank.

It is important to remember that you must not sign anything under duress. If you face harassment, note down the names of agents who enter your premises and also the time when they do so. If you are being abused or threatened, inform the nearest police station and file a case in a consumer court.
 http://www.telegraphindia.com/1070924/asp/atleisure/story_8353767.asp

Friday, July 18, 2008
Restrictions on agents make loan recoveries difficult NPAs on rise
Since the Reserve Bank of India (RBI) has formulated rules for the recovery agents of the banks, banks have been facing difficulty in recovering from the loan defaulters. And in turn this has led to an increase in their NPAs.

Adhikrut Jabti Evam Vasuli, a Mumbai-based authorized seizure and recovery Agency Company engaged in collection of loans from offending bank customers has been forced to cut down its workforce by half due to restrictions on agents. Whereas mounting defaults should have made it a time to expand rather than reducing the staff. The reason behind this is clear the state-owned commercial lenders have to go soft on defaulting borrowers after the central bank stepped in on the complaints of harassment and threats.

After the restriction the lenders including State Bank of India (SBI), the nations largest have to deal with the bad loans problem in their credits at the time when inflation has moved up to double digits to 13-year high and increasing interest rates have made credit more expensive said, “Most of the public sector banks are going slow on recovery. We have reduced our staff strength from 400 to 200 beginning 2008.” SBI is now running most of its collection activity in – house, and other state-run banks.

“The bank (SBI) has started stress asset resolution centers all over the country. This has definitely taken away some business from us,” Shah said.

In the last fiscal year, his company started employing only women as recovery agents which has resolved stressed assets worth Rs400 crore and has been able to make cash recoveries of Rs110 crore, which he anticipates will more than halve to Rs50 crore this year.

After some customers took banks to courts and filed police complaints against bank employees and agents for alleged use of force RBI disciplined loan collection agents who have been using tactics ranging from ceaseless phone calls to use of eunuchs to embarrass defaulters or thugs to beat them up.

In rules and regulation for recovery agents the apex bank in April made police verification and training of agents mandatory. Banks were also required to inform the customer before handing over a loan recovery case to a collection agent.

Fearing the risk on their reputations several banks shifted the bulk of loan collection work in-house. This has brought down the business of the collection agencies, which earn commissions ranging from 3.5% to 20% of the amounts they recover. In India there are about 146,000 recovery agents engaged by banks across the country.

With credit becoming cheap and abundant, and income level increasing India has seen more than 35% annual growth in retail loans to finance the purchases of apartments, cars and other consumer durables in the past few years. While mortgage costs had fallen to as low as 7.25% and personal loan rates dipped to 8%.

Recently there has been rise in interest rates, so the customers have started defaulting on their equated monthly installments, or EMIs, on unsecured personal loans and credit card payments. Delinquency as a percentage of loans outstanding has gone up to 5.9% from 4.5% last year for banks handled by Omega Alliance Recovery Solutions Pvt. Ltd, a Mumbai-based collection agency.

“We get at least 10 calls a day from consumers who say they do not have the capacity to pay and they want a settlement. This means we have to compromise even on the principal amount. Forget earning interest on loans,” said an executive at a foreign bank in Mumbai who did not want to be named.

According to RBI data personal loan growth has halved. The outstanding personal loans grew by 13.2%, or Rs58,669 crore, in last fiscal year as on 15 February 2008, after expanding by 30.6%, or Rs1.04 trillion, a year earlier.

There are various reasons for defaults. One is the personal loans have been used for investment in a stock market which has slumped after a five-year rally. The benchmark index of the Bombay Stock Exchange, the Sensex, lost some 37% since January; the borrowers who used their personal loan for purchasing shares have been unable to pay back their loans.

The owner of a Mumbai-based collection agency, who did not want to be named, told that “Banks have not ensured the end-use of funds, particularly when they extended a personal loan”. “NPAs are the highest in personal loans,” he added.

Banks are trying out new ways to educate borrowers to pay their loans on time. Banks are launching nationwide campaigns to persuade borrowers to pay their loans on time.

But “the atmosphere is not conducive for recovery (of bank dues)”, says a private bank executive who did not want to be named. “Collection efforts are now largely restricted to making phone calls.”

Pointing to the figures of NPAs he said the percentage of NPAs in personal loans at some banks has increased to 12-15% of total lending from 6-8% earlier.

“The growing number of defaulters has forced us to tighten our lending norms,” said the same bank executive. “Earlier, we were comfortable lending to an individual with an annual income of Rs60, 000 but now we don’t lend unless one has an annual income of Rs1 lakh.”

In the past few years, many borrowers took multiple loans but now they are finding difficult to pay back their loans after banks raised their lending rates. “Customers are prioritizing,” said another banker. “They pay their home loan EMIs on time but they don’t mind defaulting on a personal loan or their credit card dues.”

Although some of the private banks and foreign lenders are still hiring collection agents, such as Alliance, which has 150 employees on its pay roll and wants to OMEGA, expand. In fact its director Pankaj Joshi, wants to start another agency.

Joshi said he is willing to pay well. “A collection agent’s salary has gone up by 20-25% this year and it’s comparable with any sales executive employed with a corporate house.”

But he is finding problem recruiting people: only few want the job of a collection agent.

“There is a level of stigma attached to this job,” Joshi explains.

“Additionally, there are alternate job opportunities available which are socially accepted. People prefer to work as sales representatives with corporate houses.”

He added that recent instances of police complaints brought by defaulters against bank-recruited collection agents have also turned people against the profession.

http://loanstatus.blogspot.com/2008/07/restrictions-on-agents-make-loan.html

MONEY TODAY: CREDIT CARDS
 
 
Restoring Credit

The credit cards business is booming, but so are user complaints. The RBI steps in with guidelines to stem the growing harassment of card users. money today checks out how far the guidelines go.
By Puja Mehra 

NUMBER OF CARDS ISSUED: 2.69 crore in Dec 2003 to 4.33 crore in Dec 2004, a growth of 61%
USAGE OF CREDIT CARDS: 14.57 crore transactions in 2002-3; 21.19 crore in Apr-Dec 2004, up 45%.
 
SPENDING THROUGH CARDS: Rs 26,951 crore in 2002-3 Rs 44,738 crore in Apr-Dec 2004, growth of 66%.
 
Alarmed by the growing tribe of dissatisfied consumers, the Reserve Bank of India (RBI) constituted a working group in October 2004 to suggest ways to protect consumers' interest. The group was unequivocal in its verdict. "The general complaint is about the lack of transparency ... while marketing products they (credit card issuers) are alleged to give incomplete or incorrect information to prospective customers, highlighting their attractive features, while not mentioning certain unattractive, but important aspects of the products on offer," it said.

Comprising executives of top credit card companies, RBI officials and consumer activists, the group came out with a report which formed the basis for the Draft Guidelines on Credit Card Operations issued by the central bank on June 28 (www.rbi.org.in). After the draft is discussed, the guidelines will be reformulated and will become legally binding on the 42 banks currently issuing credit cards in India are likely to adopt most of them in the months to come. When that happens, owning and using a card will become much easier than in the recent past.

To be sure, the growth in the number of card users is a welcome sign for the economy, not just because it eases spending but also because it makes transactions efficient, faster and transparent. So while the card industry should be nurtured further, its growth should not be at the expense of consumer convenience and rights. "The guidelines are a welcome step. The RBI has taken a balanced approach. They are looking at growth and the guidelines are such that they will not hamper growth," says Chanda Kochar executive director, ICICI Bank.

Money Today reached out to credit card users and the top three credit card issuing banks in India-ICICI Bank, Citi Bank and Standard Chartered Bank-to find out what's at the root of rising consumer grievances and how soon the banks will adopt the RBI's dos and don'ts (see box: RBI to the Rescue).

A key cause of the growing discord between consumers and the card issuers is the fiercely aggressive sales drive usually executed through direct selling agents (DSAs) who may not be on the rolls of the bank. In the rush to enroll more card users, little time is spent in educating DSAs on how to deal with consumers and even lesser effort is made to inform consumers on what a credit card is all about. Most first time users accept cards without checking the terms and conditions. Part of the blame for their problems thus rests with the users themselves. "People must realise they are buying a financial product, not pastries. The most common complaint we receive relates to clarification on charges levied, even though the terms and conditions are provided upfront in a simple format," says T.R. Ramachandran, business manager (cards), Citi Group.

 
    RBI TO THE RESCUE
 
CARDHOLDERS COMPLAINTS
UNSOLICITED CALLS;
AGGRESSIVE SALESMEN
UNSTATED AND HIDDEN CHARGES
 
UNSOLICITED CARDS
 
NON-TRANSPARENT BILLING PROCEDURES AND CHARGES
 
WRONG BILLING
 
USE OF HARASSMENT
AND INTIMIDATION FOR
RECOVERY OF DUES
 
SHARING OF CUSTOMER INFORMATION WITH OTHER COMPANIES
 
LATE FEE BECAUSE OF
DELAYED STATEMENTS OR
CREDIT OF CHEQUE
 RBI'S GUIDANCE TO BANKS
Maintain 'do-not-call' database of customers who do not wish to be disturbed; monitor salesmen through random checks.
Don't levy a charge that is not explicitly indicated.
 
Generally do not issue unsolicited cards. If a customer is billed for such cards, bank must reverse charges and pay twice the amount as penalty.
 
Standardise terms and conditions. Give annualised percentage rates, procedure of card surrender, late charges and method of calculation.
 
Explanation should be given within a fortnight; customer grievance should be redressed in an amicable manner.
 
Bank should not resort to harassment or intimidation of customers for debt collection.
 
Obtain specific consent before
revealing customer information to another party.
 
Give at least 10 days grace period for payment before charging penal interest. Offer online billing facilities.
 
 

The card users claim the instructions accompanying cards are usually too many and too obscure to comprehend-though that doesn't absolve them of the responsibility of understanding the basic conditions and charges that the usage of a credit card entails. In its guidelines, the RBI has specified the exact size and the font (Arial-12) in which banks will have to specify the most important terms and conditions while issuing new cards.

Until now the issuing banks have run their credit card businesses under very broad guidelines from the RBI without any common regulatory framework. The working group acknowledged the absence of uniform practices. That's a source of some confusion among card users who are often unable to tell one card from the other. The group also found that foreign and private sector banks "use more aggressive marketing methods" than public-sector banks.

In the first week of July, all shoppers running bills of over Rs 1,200 at the supermarket Big Bazaar in Delhi were approached by DSAs of ICICI Bank for issue of new cards. "Can a shopping bill of Rs 1,200 be proof enough for credit worthiness? They were just collecting people's bills and their visiting cards," said a baffled shopper who was accosted by a DSA. Every card issued to such shoppers would have fetched the DSA Rs 500 as commission. ICICI Bank clarifies that the shopping bills are only the first contact point. "That list of people is subject to further criteria before the cards are actually issued," says Kochar. ICICI Bank is India's biggest credit card issuer with 3.4 million cards but it is not the only bank to undertake such sales drives. Other banks go even farther.

 
  PICTURE SPEAK
 
 
KIRAN PAL SINGH,
DELHI-BASED BUSINESSMAN 
Complaint: Hasn't received a single statement for his ICICI Bank credit card. Singh calls customer service every month to check his dues and pays. Last month, he paid on time yet the bank auto-debited a late fee of Rs 400.
ICICI BANK REPLIES: Statements are sent by post. Duplicates were sent on each complaint. SMS alerts were also sent. No late fee was levied.
 
"It's like any other business. Everybody has to meet targets. And you can't issue cards to any Tom, Dick and Harry just to meet targets. But these are nice statements to make, they are not always practicable," says Neel Chatterjee, regional head (corporate affairs), Standard Chartered India, rather candidly.

Credit card companies are known to have dispatched new cards to existing cardholders solely on the basis of a photocopy of their other cards in use. A fresh card is promptly delivered without a single question asked of the user. This is just one of the many ways in which cards are being issued to people who may not even need them. Many of these users turn out to be either defaulters or over-demanding customers. Cards are activated and the customer is billed for the annual fees and for charges of services he may have never asked for. In addition to invading privacy, such pre-activated cards pose risks to the recipients in case they fall into the hands of people who misuse them.

Worse, calls to credit card issuing banks for redress are not always attended to. Cases abound where cardholders have been classified as defaulters, even after having paid the bills, and paid in time. The defaulter list is then circulated among all banks as a blacklist of "troublesome customers"-all this without informing the people whose names are listed.

In some countries, including the US, it is illegal to send a credit card to a person unless he has applied for or agreed to receive one. "Many banks just send a card which remains activated till the receiver informs the banks that he does not require it. We activate only those cards where the recipient informs us that he is interested," says Ramachandran. The draft guidelines have barred issuing of unsolicited cards. If a bank is found billing for such cards, it will be liable to pay a penalty to the person to whom the card was issued. The penalty will be twice the charges raised on the unsolicited card.

Delay in the delivery of credit card statements is another major problem. If the statement reaches after the date on which payment was due, the banks levy a late payment penalty. There are card users who claim they have not received a single statement for months and years after holding a card (see case study). Some continue to make payments by calling the card issuing bank over the phone to find out the amount due on their card.

Banks are not always to be blamed on this count, for they wouldn't single out a few customers and not issue them statements. Since all statements are dispatched by ordinary post, the delay or non-delivery is blamed on the postal department. "We have no control over the last mile (in delivery of the statement). Yet we reverse late payment charges for many of our regular customers," says Ramachandran. The working group has recommended promoting the use of online billing.

The RBI has also objected to the use of threats and intimidation for recovery of outstanding payments from card users. It's an open secret and many banks employ questionable means-including hiring toughies and eunuchs-to coerce or embarrass the people they classify as defaulters into paying their dues. Sure, there are many card users who would willingly default and hide behind the legal maze to get away from paying, but resorting to unorthodox means for recovery is no answer, especially when it is innocent customers who are at the receiving end. The guidelines prohibit use of all means of intimidation by banks. Card issuers have also been asked to maintain a "do not call" database. People registered with the database mustn't be called for a sales pitch.

How soon and how truly would the banks adhere to the guidelines? The three leading card issuers assure that they are already implementing most of what the RBI has prescribed. The RBI's directive should speed up matters. "Monitoring of the implementation will become more stringent at the banks as it will be the RBI that will be watching them now," assures Kochar. Coming from the market leader, that's reassuring. Now wait for banks to walk the talk.
http://72.14.235.132/search?q=cache:hYTBOpZVK1AJ:archives.digitaltoday.in/indiatoday/20050725/mt-credit.html+Recovery+harrassment+by+Private+Sector+banks+in+India&hl=en&ct=clnk&cd=26&gl=in
 
Kerala

Arm of the law is stronger than muscle power

-------------------------------------------------------------------------------

Reports of borrowers from banks and financial institutions being harassed by loan recovery agents continue to come in despite Reserve Bank of India directives and court orders. What needs to be done to check the trend in Kerala? Our readers respond:

--------------------------------------------------------------------------------

 

Reserve for deserving

Many people do not borrow money from banks and financial institutions for genuine purpose. For example, some take loan on the pretext of investing in agriculture. But the money is spent for some unproductive purpose. Loans are at times spent even for luxuries. This makes repayment more difficult. Loans are given to undeserving people. Banks and financial institutions then try to recover the amount, sometimes resorting to harassment. This is natural because it is a question of their very existence. They cannot just forgo the amount. But highhanded means have to be avoided. For that, loans should be paid in instalments after verifying that the amount given as first instalment is spent for the purpose for which it is given. If the investment is for a genuine purpose, the bank can be sure that the borrower will repay the amount. If there is real loss due to unforeseen reasons, the government should intervene and write off the amount in genuine cases.

T.M. Paily

Kothamangalam

Farmers’ plight

Many farmers committed suicide in the State in the past two years. Most of them had apparently not made good use of the agricultural loans availed by them. Quite a few spent the money unwisely. The government’s initiative of reviving agricultural sector by providing loans through banks at low interest rates is a welcome move. At the same time, judicious use of such financial assistance too must be ensured. Farmers face the wrath of loan recovery agents too. Many are not able to tolerate such harassment. The media should strive to creating awareness among the farmers about proper utilisation of financial resources from the banks.

Krishna K.

Kochi

Traps on roads

Banks give away loans to public without checking their credentials and repayment capacity. They employ agents too to lure the common man with attractive offers. In major junctions, students, armed in a laptop are seen canvassing for these banks. A man in dire need might fall for it. Most will not be in a position to pay back the amount. Harassment follows and at times, suicide results.

Loans for education, agriculture and personal loans should have some criteria. The amount should be utilised only for that purpose, which is not done nowadays. RBI too should impose some restrictions on banks with regard to giving loans. Adequate surety must be made mandatory.

S.N. Thiruvazhiode

Ernakulam

The ‘new’ ones

Three types of banks deal with general public -- commercial banks, cooperative banks and new generation banks. The first two do not take recourse to harassment for recovery of loans. They have specific norms to follow before granting loan. But new generation banks are very liberal in granting loans. Their dealings are extremely cordial up to disbursement of loan. So, the middleclass people are more attracted to these banks. To avoid harassment, Keralites should cultivate the habit of availing loan only for genuine needs, and only after assessing their repayment capacity.

P. Prakasan

Kottayam

Dignity goes for a toss

Instances of loan recovery agents of banks/financial institutions like credit card companies resorting to unethical methods against defaulting borrowers/clients have, of late, increased considerably. While nobody can question a bank’s motive to initiate loan recovery steps, the whole process needs to be done in a dignified and transparent manner. Recovery agents in the guise of goons and musclemen intimidating a borrower/client cannot be tolerated. The banks/financial institutions should strictly follow the recent guidelines issued by Reserve Bank of India in this regard.

Ideally the process of loan recovery should be handled in house by banks/financial institutions. The system followed by State Bank of India and its associates in this regard can be followed by others. If at all still a recovery agent is to be appointed, it should be ensured that his antecedents are thoroughly screened so that the work is not handed down to an unscrupulous person. If any recovery agent is found to be crossing the limits of probity, appropriate criminal action must be initiated against him. The bank concerned must be penalized.

T.N. Ramachandran Nair

Thrissur

Easy credit

Some cases which caught the public’s attention, like the case of suicide of Rajani S. Anand’s, who ended life since she was not given a loan, have forced banks to be more lenient on this issue. Many people misuse this easily available credit. Problems arise when banks try to recover the amount.

The commission agents are duty bound to collect the amounts from the borrowers. They are paid for this by the banks. RBI has issued instructions not to take stringent action against borrowers, but the banks have no other way.

Governments write off loans when they come to power. But this cannot be continued for long. Prime solution is avoiding misuse of loans.

P. Sankaranarayanan

Thripunithura

Role of government

RBI guidelines clearly mention that it recovery of loans through force is unlawful. The public can, and must, approach the court of law in the event of harassment by banks. But many are reluctant to do so for fear of consequences. In such cases, there must be provision for the government to interfere and rein in such financial institutions.

Neelandon Kuruvattoor

Ottappalam

Caution pays

Reserve Bank of India has advised banks against setting stiff targets or giving high incentives for agents in recovery of loans. Banks have also been asked to strictly adhere to banking codes and standards. Despite this, recovery agents continue to harass borrowers. The agents seem to be unaware of the fact that the banks are responsible for their actions and that they must follow the procedures stipulated.

Before a loan is issued, the bank must ensure the repaying capacity of the borrower. Upon receiving a loan application, the financial officer empowered to grant loan has to scrupulously check the documents to be pledged by the borrower. Also, loans should only be issued only to meet unavoidable and obligatory expenses. Otherwise several people will become debtors. In the last decade, 1.5 lakh farmers committed suicide in India, mostly because of non-clearance of debts. Kerala is not an exception to this. Banks should be cautious while giving substantial loans. They must realise that prevention is better than recovery.

Kunhikannan

Koyilandy

Be aware of rights

Many financial institutions engage muscleman to recover loans. They humiliate borrowers by forcibly taking possession of vehicles and property. Even reputed banks are guilty of this egregious practice, though covertly. The Supreme Court had ruled that banks are responsible for the actions of their agents and wanted the forum of the Lok Adalat to be used for loan recovery. The RBI agreed to do so.

Recently the RBI has reiterated guidelines for loan recovery which forbids abusive practices. However majority of borrowers, being poor farmers and petty traders, are not aware of their rights and succumb to the intimidation of loan sharks. Government must conduct awareness programmes and establish legal aid cells for them and enlist the services of NGOs.

M.K.B. Nambiar

Mahe

Guidelines no bar

Despite RBI guidelines and court directives, loan recovery agents continue to pester borrowers. The apex bank and the government must devise practical means to counter this problem. More importantly, people should be made to realise that such hooliganism is unlawful.

C.A. Rasik

Kannur

Check the norms first

The complexion of borrowing from banks and financial institutions has undergone a sea change in the past decade. Earlier, the procedure for taking loans from such agencies was a fairly long drawn out process. Now, they impose advances on customers. This shows that a good part of the profitable business of these institutions is interest income and service-charge income from distributed credit including those on credit cards.

Since a large risk is involved in recovery of these loans, and because they form a huge chunk on their income, banks at time deploy undesirable means to recover them.

Many a time the failure to repay the loan in time stems from the inadequate understanding of the terms and conditions of it by the borrower. One way of minimising undue default in the repayment of instalments is to make it mandatory for the lending agencies to explain to the borrower conditions of the loan, especially the methodology for calculating the interest.

This way, the borrower will have an idea about the feasibility of paying instalments.

The lending institution should send a notice when the instalment is defaulted beyond the grace period or beyond the point where penal charges should be considered.

Loans without collateral are normally given only to those persons known by the institution to be credit-worthy and reliable. For secured loans, the normal course of action – of recovering amount from the securities – in the event of default, after giving sufficient notice to the borrower. These measures, if sincerely adopted, will help banks do away with third degree methods for loan recovery.

BKS Nair

Thiruvanathapuram

Shylocks of trade

People take loans mostly because of unavoidable circumstances. Bank and other financial institutions lure the needy. The terms and conditions are so phrased that most of the prospective borrowers fail to grasp the hidden catch. In their anxiety to tide over the distress, they accept the terms readily.

Then comes the difficult part. Delay in repayment prompts the intervention of recovery agents who unleash measures akin to those adopted by the goons of private money lenders. The practice is unethical. Lending institutions should not play Shylocks. Loans should be offered only after proper scrutiny of the credentials of the borrower. Recovery efforts should not meander into rowdyism.

N. Sadasivan Pillai

Guntakal

Borrow within limits

Consumerism is having telling impact on the life of middleclass Keralites, who are desperate to ape the lifestyles of the upper income strata. If his income is insufficient, he has no qualms about borrowing money. Some banks too adopt unhealthy marketing strategies to convince the needy that loans are available on easy terms. Everything will be smooth as long as the repayments are prompt. Once they are delayed, the borrowers will start facing the music from the banks or its recovery agents -- threatening calls, manhandling by agents’ henchmen and confiscating of vehicles and household goods.

Chitti companies, private banks, new-generation banks, pawnbrokers and credit card companies use such strong-arm tactics, at times with the connivance of local police.

This is a condemnable practice as the banks have every right to take a legal recourse.

The recent stricture by the Reserve Bank will do little good unless the State government implements it with right earnest .

The stricture contains many guidelines like banks keeping track of details of recovery agents, intimation to the borrowers on recovery agents and formation of grievance redressal cell.

Today, some banks’ doings are tarnishing the image of the entire sector. This trend should be checked as early as possible.

Reghu P.L.

Thiruvananthapuram

Collect, but legally

Uncivilised behaviour in a civilised society is totally unacceptable.

Apart from civil law, the Parliament has strengthened the loan recovery efforts of banks with enactments like Provisions of Revenue Recovery, DRT Act and the Securitisation Act.

Besides, publication of a defaulter’s name in the defaulters’ list of Reserve Bank of India (RBI) and down-rating by Credit Information Bureau (India) Limited are other measures available to the financial system to enforce repayment of loans.

Banks can also invoke provisions of criminal laws if a borrower has obtained the loan fraudulently or if there is any breach of trust during utilisation of the loan.

One reason for poor recovery of bank loans is that these enactments have made bank officials complacent in their appraisal, supervision and monitoring of the loans.

Verbal or physical abuse or harassment by the recovery agents should not be tolerated.

Such instances should be severely dealt with and both the recovery agents and the banks concerned should be penalised by the RBI.

The individual recovery agents, the chief executives of the recovery agent firms and the bank’s executive who ordered the recovery should be criminally prosecuted. The recent orders by some courts/consumer fora are in the right direction.

The Securitisation Act which has provided for recovery agents should be amended to incorporate these penalties and criminal proceedings.

George Thomas

Thiruvananthapuram

Avoid them

New generation banks and financial institutions resort to even hooliganism to recover the loan amount. In a petition filed by these institutions before the Supreme Court seeking use of force on customers, the court ruled that the use of force and other third degree methods to recover dues was unlawful. It added that banks are entitled to resort to legal modes for loan recovery. Even now the new generation banks keep goons to threaten borrowers.

The public must avoid such banks and ideally deal with nationalised ones. In case of an assault, the concerned may move the appropriate authority viz. the police. If they are indifferent, file a complaint before the judicial magistrate.

V.P. Ramesan

Thripunithura

Laws with more teeth

Banks are expected to follow the guidelines of the Banking Regulations Act 1949 and the Negotiable Instrument Act. One wonders how strictly it is adhered to.

The sector is rife with unhealthy competition. Banks and other financial institutions literally hunt for those in need of loan. As per norms, loans must be issued against approved guarantees scheduled under the Banking Act. But now, loans are given as per banks’ whims. This is particularly true for vehicle loan. Asking commission agents to seize vehicles from the defaulters is unjustifiable. Take defaulters to court. The banks must evolve a new banker-customer relationship, create a vibrant banking culture, with least trouble to both the banks and the borrowers.

If the present banking rules are not strong enough to recover loans, the Reserve Bank, with the approval of the Central government, must make new rules.

G. Muraleedharan

Vattiyoorkavu
http://www.hinduonnet.com/thehindu/thscrip/print.pl?file=2007120950280200.htm&date=2007/12/09/&prd=th&