The Reserve Bank of India’s (RBI) effort to encourage people to migrate from paper based fund transfer to electronic transfers is most welcome. It would mean a faster turnaround of funds in the financial system. Unfortunately, in its zeal to promote electronic transactions, the Committee on Migration to an electronic system recommends creating disincentives for use of paper-based cheques. It wants service charges on cheque processing transferred to the customer and electronic fund transfers and Net banking made free of charge. It also recommends higher pricing of demand drafts, pay orders and Bankers’ Cheques. This is ridiculous and must be contested immediately. India does not have adequate literacy, technology savvy or computer penetration to contemplate such punitive disincentives. In fact, many depositors even refused to move away from old-fashioned passbooks, causing RBI to ask banks to issue them on request. Most of India does not even have electricity to keep computers going on a 24X7 basis. Since this report is posted for public comment, depositors must write to the RBI and lodge a strong protest. The full report is available at www.rbi.org.in under “What’s New”.

What scam?

Why is a routine investigation by the Securities and Exchange Board of India (Sebi) into listing day manipulation of share prices being touted as the unearthing of a major scam? Top Sebi officials would confirm that they received tip-offs on at least four scrips within hours after they were listed or re-listed. This was based on simple market intelligence. First day manipulation is often a way of settling subscription management and is part of every primary market boom. The regulator had to merely tap into its own institutional memory to know this. The Inter-Market Surveillance System (IMSS), which is credited with alerting the regulator, would indeed hasten the investigation by providing real-time data from multiple sources. Meanwhile, the investigation does not cover all scrips ramped up on listing day or all the players involved. A moot question is whether Sebi will go past the bit players to nab the main ones. Even in the demat scam, the investigation never went past the front-entities to the masterminds of the multiple application racket. Instead, Sebi came out with an unworkable disgorgement order and conveniently handed over part of the investigation to the Central Bureau of Investigation (CBI), where it has made no headway.

... contd.