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Banking News 21.02.2017

There will be no Witch-hunt: FM Jaitley meet

top bankers to allay fears, discuss bad loans


The Economic Times

Published on February 21, 2017



New Delhi, February 20: Finance minister Arun Jaitley on Monday met managing directors of large public sector banks to allay their fears on investigating agencies following an overzealous approach in case of loans turned bad.


A senior bank official said that the meeting was sought by bankers through their association, Indian Banks Association as there was widespread fear among bankers after arrest of former bank officials in case of Kingfisher loans.


“There is almost a banking paralysis in PSBs. We were looking to seek assurance from the finance ministry that there will be no witch hunt,” said the above quoted official.


A finance ministry official however said that meeting was held to take a stock of the banking sector and also steps taken to bring down the non-performing loans.


“A host of issues came up for discussion, including capital needs of banks and implications of good and services tax (GST),” said a finance ministry official, adding that the finance minister also discussed the problems faced by banks in faster resolution of stressed assets.


Non-Performing Assets or bad loans of public sector banks (PSBs) stood at Rs 5.89 lakh crore till September 2016, which estimates put at 20% of the gross advances.


Bankers, who attended the meeting, included Arundhati Bhattacharya, chairman of country’s largest bank, State Bank of India, managing director of Punjab National Bank Usha Anantha-subramanian and IDBI’s CEO Kishor Kharat among others.


In January, Central Bureau of Investigation had arrested former IDBI’s bank chairman Yogesh Agarwal in connection with a Rs 950 crore loan given by the bank to the now-defunct Kingfisher Airlines. The CBI raised queries about how the bank lent money to company that was rated below-investment grade.


Banks Board Bureau (BBB) chairman Vinod Rai had also told ET that there will be no witch hunt against bankers for loan defaults and that investigation agencies cannot take action without merit in cases. “I am confident that no action would be taken against any banker unless there were very clear indications of malfeasance,” he had said.



From E-Group, Banking-News



State Bank of India website goes generic

New web address is www.bank.sbi


The Business Standard

Published on February 21, 2017



Chennai, February 20 (IANS): The State Bank of India (SBI) on Monday announced rebranding of its website as bank.sbi. According SBI, the new domain name bank.sbi is the highest domain protocol known as generic top level domain (gTLD), an official statement.


"The SBI group has several businesses. For those wanting to do banking or want to know about the bank it is easier to type out www.bank.sbi." M.K. Rekhi, General Manager -Social Media.


The SBI group having presence in insurance, mutual fund and card may also go for such Generic top-level domain (gTLD). With this, SBI has become the first banking organisation in India to use a gTLD for its online presence and providing an exclusive experience of assurance and security to its customers.


"SBI being the largest bank has always been the pioneer in adapting new technology. SBI has always believed in providing high-tech yet secure internet experience to its customers. Bank's own gTLD is another step in this direction," SBI's Chairman Arundhati Bhattacharya said in a statement.


Bank's own gTLD aims at simplifying the digital experience of customers and brings in enhanced security against phishing and lookalike websites. Due to its non-replicability, a gTLD site like ".sbi" conveys an assurance to the customer that the site is authorised, genuine and is not an inappropriate or phishing site.


The existing site of sbi.co.in will continue till customers get used to the new avtar of SBI's secure website.



From E-Group, Banking-News



Rs 7.77 Lakh Crore tax hole in govt’s books:

Who is at fault?


Kishor Kadam and Dinesh Unnikrishnan

The FirstPost Online

Published on February 20, 2017



New Delhi, February 20: One of the less discussed figures in the Union Budget 2017 is the substantial increase in the tax revenues raised but not realised. Look at last four years; this figure has more than doubled, to be precise by about 147.6 percent. It stood at Rs 7,76,916 crore in 2015-16 compared with Rs 3,13,755 crore in 2011-12. If one compares the 2015-16 figure with that of 2014-15, the figure has increased by about 11 percent.


Why is the number important?


For any government that seeks to broaden the tax base and increase both direct and indirect tax revenues, finding a way to effectively address the dispute resolution mechanism and reduce the portion of unrealised revenues is critical to boost the revenue base. In India, these figures tell us that governments (both UPA and NDA) have largely failed to crack this puzzle.


Remember, these are tax collections government should rightfully get but not availed for various reasons — some are disputed, others are simply not paid even without any dispute.


To be sure, it is not that the current and previous governments have not taken note of this widening gap. There have been efforts starting with the UPA time to address the disputes and increase tax realisation. But, the data shows that none of those measures have really worked well.



 Tax revenues raised but 

not realised (principal  tax)

(in Rs Crore)


Under dispute

Not under dispute






















Source: Budget Documents


If one looks closer, of the total chunk, the tax revenues under dispute has shown a dramatic rise of 167 percent over the 4-year period—from Rs 2.56 lakh crore to Rs 6.83 lakh crore.


Of the disputed category, the two major components are corporate tax (Rs 2.92 lakh crore) and personal income tax (Rs 2.86 lakh crore).


Even in the category of tax dues ‘not under dispute’ there has been a 63 percent increase over 4 years. Here too, corporate tax dominates the chart with Rs 52,005 crore pending followed by personal income tax, Rs 29,401 crore.


If the government manages to realise at least a fraction of these pending dues, this can significantly boost the tax revenues.


The 2017 budget, announced by Finance Minister Arun Jaitley, acknowledges the problem of major disparity between the number of taxpayers and those who actually pay the taxes to the state. But, the Budget doesn’t say much on how to deal with this issue.


“India’s tax to GDP ratio is very low, and the proportion of direct tax to indirect tax is not optimal from the view point of social justice. I place before you certain data to indicate that our direct tax collection is not commensurate with the income and consumption pattern of Indian economy,” Jaitley said.


Further elaborating this, the FM said as against estimated 4.2 crore persons engaged in organised sector employment, the number of individuals filing return for salary income are only 1.74 crore.


As against 5.6 crore informal sector individual enterprises and firms doing small business in India, the number of returns filed by this category are only 1.81 crore.


Out of the 13.94 lakh companies registered in India upto 31st March, 2014, 5.97 lakh companies have filed their returns for Assessment Year 2016-17.


Going by the Budget, of the 5.97 lakh companies which have filed their returns for assessment year 2016-17 so far, as many as 2.76 lakh companies have shown losses or zero income.


2.85 lakh companies have shown profit before tax of less than Rs 1 crore. 28,667 companies have shown profit between Rs 1 crore to Rs 10 crore, and only 7,781 companies have profit before tax of more than Rs 10 crore.


Jaitley argued that situation is not different even for the individual taxpayers. “Among the 3.7 crore individuals who filed the tax returns in 2015-16, 99 lakh show income below the exemption limit of Rs 2.5 lakh p.a., 1.95 crore show income between Rs 2.5 to Rs 5 lakh, 52 lakh show income between Rs 5 to Rs 10 lakhs and only 24 lakh people show income above Rs 10 lakhs, the FM said in the Budget speech.


“Of the 76 lakh individual assessees who declare income above Rs 5 lakh, 56 lakh are in the salaried class. The number of people showing income more than Rs 50 lakh in the entire country is only 1.72 lakh. We can contrast this with the fact that in the last five years, more than 1.25 crore cars have been sold, and number of Indian citizens who flew abroad, either for business or tourism, is 2 crore in the year 2015. From all these figures we can conclude that we are largely a tax non-compliant society.”


Unleashing the taxmen on corporate and individual taxpayers to harass them and force them pay may not be a successful option, economists have argued, saying this will only encourage further tax evasion. The unrealised tax figures quoted in the table offers evidence. Instead, the government would do well to improve the dispute resolution and incentivise tax payments.


The 2017 budget failed to offer any major relief to both individual and corporate tax payers, belying expectations. The reduction in corporate tax rates to 25 percent for those firms with turnover of less than Rs 50 crore wouldn’t help bigger firms—few in number but huge in terms of revenue size. Similarly, one could argue that there wasn’t much for individual taxpayers in the higher income bracket in the Budget.


The widening gap in the unrealised tax revenue numbers should be wake-up call to the government to urgently bring about mechanisms to engage with the taxpayer, resolve the disputes and encourage them pay their dues to the state. Harassing the taxpayer, surely, isn’t the way. What is needed is constructive, friendly engagement by offering tax incentives and making the laws simpler and easy for all to comply.



From E-Group, Banking-News



India witnessing sophisticated cyber attacks

from organised and unorganised players


Sachin Dave

The Economic Times

Published on February 21, 2017



Mumbai, February 20: In May 2015, two Indian conglomerates were forced to pay $5 million each in order to prevent hackers from disclosing information that could have implicated them in a wrongdoing. Investigations revealed that the hackers had gotten into the companies' IT systems two years back but waited for a right opportunity. The blackmail demands were made only after a scam involving thefts of documents from the petroleum and other ministries erupted in 2015. The hackers threatened that both the companies pay the money or the documents and email trail would be leaked to Indian government. Eventually, both companies paid the money to the hackers.


In 2014 Gujarat-based Rs, 1,500 cr BSE listed, Deepak Nitrite was surprised when one of its regular customers based in the US, didn't pay even after receiving a consignment. When the company asked the customer about the payment, they were told that the payment was made to a new account in Malaysia. The client had received an email from Deepak Nitrate's official id just earlier informing it of a change in bank account details. Deepak Nitrite had neither changed the bank account nor communicated any such thing to its customer. The Gujarat based company has filed a complaint with cyber cell of Vadodara police but nothing has come of it yet.


In July this year, state run Union Bank of India was breached by cyber hackers. The hackers had managed to get past the bank’s security systems but the money trail was traced and the movement of funds was blocked. If the hackers had been successful, this could be the biggest incident even bigger than hackers stealing money from Bangladesh central bank.


Biggest Indian conglomerates, mid-scale companies based in tier 2 or tier 3 cities and the country's biggest banks; everybody is being targeted by the hackers. And as the days go by, the breach attempts are not just basic as they used to be, but getting sophisticated by the day.


In fact, there is a joke amongst cyber security experts: There are only two type of companies: the ones that know that they are hacked into and the ones who don’t.


"Increasingly, more and more Indian companies are witnessing sophisticated hacking attempts and cyber risks are increasing. Hacking attempts can be categorized in to three parts, one by amateur hackers who only deface websites, sophisticated hackers who are after money or information and state owned hackers who are guided by their country's policies," said Sivarama Krishnan, leader, cyber security, at PwC India. Krishnan heads the country's largest team of 300 cyber security experts including ethical hackers.


While no figure is available officially, in-house analysis conducted by the biggest cyber security firms say that Indian companies lose anywhere around $ 4 billion every year due to cyber-attacks.


Hackers delight


Experts point out that the bigger problem in India is the secrecy, something that works in hackers' advantage. Most of the companies and promoters who are hit by the hackers prefer to push it under the carpet.


The problem with pushing things under the carpet would mean, other companies who are a potential targets don't get a chance to even be prepared. Worse still, hackers do tend to share their secrets on what is famously known as the dark web—a platform where hackers interact, buy, sell information anonymously.


In what appeared as a synchronised attack, hackers seized control of computers at three Indian banks and a pharmaceutical company in January this year. The hackers got into the IT system and then locked each and every computer. The hackers had demanded that the company pay one bit coin per computer so as to unfreeze the computers.


Neither the banks nor the pharma company approached the police or any other investigation agency. Rather they decided to rope in a private investigator. It was found in the investigations that in all four cases, the hackers had used the Lechiffre ransomware. And how did the ransomware got downloaded in the company's IT system in the first place? In all the instances, the infection began when an email disguised as a communication from senior management was opened by some junior employees.


"Targeted attacks are increasing and insider related compromises are the largest in India. These are basically ones where employees, including top executives, secretaries/assistants unknowingly and innocently, click on links or open attachments or download content from genuine looking emails, and compromise the company's IT infrastructure," said Altaf Halde, managing director, South Asia, Kaspersky Lab, India.


The hacking attempts on banks may still be kept under the wraps but for the Reserve Bank of India, that has now made it mandatory for the banks to disclose those. The vulnerability of the banks came into light recently when data of about 3.2 million debit cards was lost in what is claimed to the India's biggest breaches. SBI, HDFC Bank, ICICI, YES Bank and Axis were worst hit by the breach of the debit cards.


The recent breaches have now led many banks to beef up their security systems. Some banks are now creating a parallel and a decoy IT system so that the hackers attack those instead of actual IT systems.


"Many large banks are putting honeypots in place, which are mainly parallel IT systems in the virtual world but this requires a lot of investment in terms of time, money and R&D," said Mukul Shrivastava, partner for fraud investigation and dispute services at EY. Honeypots are mainly decoy computer systems to detect cyber attackers and study how they attack the server, and then putting proper checks in actual system against similar attacks.


Industry experts point out that while the banks may just have begun to realise their weakness many other Indian companies are still ignoring the threat.


So grave is the threat, that even Indian information technology companies are not safe. Hackers, suspected to be based out of China, managed to break into two major IT firms last year, possibly chasing information on some American firms. While in both the cases no information was lost, the “audacity of the hackers” had shaken the firm, people close to the development said.


"Knowing the spend of Indian banks on cyber security versus their USA counterparts, we still have a long way to go when it comes to being equally matured against sophisticated cyber-attacks. Banks; however are the more matured among other industries like manufacturing, hospitality and health Care where the focus on cyber security is still extremely low,” said a cyber security expert.


Often companies complain that whatever steps they take; hackers seem to be at least a step ahead. Enter ethical hackers who are bounty hunting weaknesses in companies’ IT systems and getting paid for it.


Bounty hunting


Saket Modi, a 25-year-old techie, and CEO of Lucideus, an online cyber security firm is Blondie in the cyber world equivalent of The good, the bad and the ugly. Modi and his teammates — about 60 typical IIT engineer and ethical hackers — attack companies’ IT system to find loopholes and get paid for it. And all this is completely legal.


Many companies including ecommerce and mobile app-based service providers are increasingly roping in ethical hackers to look for loopholes in their system by continuously trying to hack into them from outside and report back to the company. In some cases these ethical hackers also help companies fix the glitch.


"We're in the job of finding flaws across people, process and technology of an organisation's digital setup. We hack them with their permission and produce an overall maturity scorecard of the organisation providing the CEO/CFO the information about the overall cyber risk they are sitting on along with a roadmap to enhance the cyber security maturity of the organisation," said Modi, CEO at Lucideus, an online cyber security firm.


Experts point out that the new age companies like Flipkart, Ola or Paytm are better prepared for the cyber hackers. These companies compared to the traditional companies have been proactive in tackling the threats.


"Considering the large number of vulnerabilities that we find across platforms, I believe companies should focus on pro-actively building secure products than to later spend on security products to reduce the risk," said Modi.


While bounty hunting by security experts may be one of the flashiest of the techniques that’s not the only trick experts have up their sleeves. During a conversation cyber security head of PwC said that some of its tech experts do monitor even the dark web, disguised as hackers. This is mainly to keep an eye on what’s happening behind the closed door, and if they can stay a step ahead of the hackers. Recently, many Indian companies have been informed about attacks and vulnerabilities on similar companies across the world.


So In January this year when American hotel chain Hyatt Hotels Corporation said its properties in India were also hit by a malware that was found on its customer payments system, many other Indian hotels sprung into action.


In many cases a malware was sent to the hotel networks either through emails attachments. In some cases the malware was sent through the hotel WiFi networks, said cyber experts. One of the latest entrants in a slew of malwares targeted at hotels is 'darkhotel'. The malware is said to be used by hackers to spy on business travellers/corporates, who conduct meetings in top hotels. The modus-operandi of the hackers is to gain access to computers or phones of the corporate, while using the hotel's WiFi services. Many five star hotels, which conducted the investigations, found that several of their WiFi networks to be compromised. Thankfully for them neither these breaches were made public, nor has any customer come forward claiming that they have lost the data. If the things go as they are already, it might not be long before that happens.



From E-Group, Banking-News



Grouse over bank boards


Pinak Ghosh, The Telegraph

Published on February 20, 2017



Kolkata, February 20: Bank unions have expressed concern over the delay in the appointment of representatives of employees on the boards of public sector banks and have urged the North Block to expedite the filling up of these vacant positions.


As many as 19 public sector banks do not have representation from either officers or workmen on their boards despite a statutory requirement under the Banking Companies (Acquisition and Transfer of Undertakings) Act.


These appointments to the board are in addition to the requirement of representations from the central government, the Reserve Bank of India, shareholders and chartered accountant. The Centre has to clear the appointment of such directors after consulting the RBI.


According to the All India Bank Officers’ Confederation (AIBOC), the vacancies in some of the public sector banks have been for a period of more than a year.


“It has been more than a year since the recommendations have been submitted by various associations. However, to our dismay, the appointments have not taken place despite several communication to the bank management and the ministry of finance. The appointment files are stranded in the system,” said Harvinder Singh, general secretary of the AIBOC.


“These appointments are regulatory requirement for good governance and must not be neglected at a time public sector banks are passing through a critical phase with high levels of non-performing assets and poor financial health,” Singh said.


In a letter to the department of financial services, the AIBOC had pointed out that the delay would rob eligible office bearers the opportunity of being appointed to the board because of the age restrictions. Only those with 3 years of service remaining are eligible.


Banks unions fear the delay could also be on account of the government exploring the merger of some of the public sector banks, besides the already announced merger of the SBI and associate banks.


“This issue regarding the filling up of vacant positions of officer and workmen directors in public sector banks is one of the demands on which the all India bank strike has been called on February 28. The bank unions are also opposing any anti-people reforms, including outsourcing of permanent jobs,” said Rajen Nagar, president of the All India Bank Employees Association.



From E-Group, Banking-News



Protection of consumer’s interests

 in the digital mode of payment


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