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Rot in Indian banking - banning LoUs a panacea

posted 6 years ago

Dr. Manmohan Singh once said (context was Indo-Pak
relations) – Lamhon ne Khataki, Sadiyon ne sazaapaayi (moments make the
mistake, centuries bear the punishment).

History keeps repeating itself. One or two big
jewellers milk (rather rob) the banking system, banking officials play hand in
glove for years. Apart from making millions in the demonetisation scheme, the
saga must have been a banker’s dream come true.

When caught, let us shoot the messenger. After a
monumental shameful failure to detect banking frauds, RBI bans Letters of
Undertaking, as if the instruments were the problem.

This definitely has led to confusion in all quarters,
be it borrowers or the banks. The trading community will have to chalk out new
funding and repayment strategies to keep their businesses afloat.

LoUs are guarantees issued by Indian banks against
which a foreign currency loan is availed. Standard LoU are typically rolled
over many times – it help the borrowers in repaying their earlier dues.

With no more LoU or rolling facilities in respect
thereof, the genuine borrowers will bear the brunt of misdeeds of few and now
have to look to borrow locally to repay the maturing LoUs.

Industry bodies are of the view that RBI’s move of a
blanket bank will adversely affect trade finance and currency movement. This
will ultimately hit short -term margins for corporates and may even result in a
higher default rate, at least in the short term.

And the perpetrators enjoy the limelight, away from
the regulators.

We, the taxpayers, are idiots. Banks will keep making
provisions for bad debts and reducing interest rates for our savings

Cyber Surakshit Bharat initiative

Published: 08 Mar 2018

These days, we keep hearing or reading about some or the other cyber-attack – hackers keep using ransomware on the data of various government agencies and big corporates all over the world. Even our firm website has been hacked many a times.

As a consequence, no individual, government or company is feeling safe about its data in the cyber world – data belonging to one and all is increasingly becoming vulnerable to cyber-attack of hackers.

In the light of upsurge in cyber-attack incidents by cyber hackers, the Central Government has recognised the imminent need to intensify its efforts to fortify cyber security practices to safeguard the data from cyber threats.

Accordingly, the Central Government in association with leading IT companies (Microsoft, Intel, Redhat and Dimension Data as founding partners) has taken the first public – private partnership of its kind, an initiative titled Cyber Surakshit Bharat Initiative (“Initiative”).

Knowledge partners of the Cyber Surakshit Bharat initiative are Cert-In, NIC, NASSCOM and the FIDO Alliance, CISCO and consultancy firms (Deloitte and EY).  

The underlying intent of this Initiative is to educate government staff about importance of cyber security and provide adequate training to ensure that they possess ample knowledge of cyber technology to safeguard government confidential information and data from cyber threats and attacks.

Another dimension of the Initiative is to build capacity for safety measures for Chief Information Security Officers (CISOs) and frontline IT staff across all government departments. 

The initiative is likely to create a collegium of IT people with best brains in the business from public and private sectors with the object to construct a robust cyber security system in place to ensure all confidential data and information is protected from cyber threats or attacks.

The Initiative will include an awareness programme on the importance of cyber-security; a series of workshops on best cyber practices and enablement of the officials with cyber-security health tool kits to manage and mitigate cyber threats.

One can hope that the serious implementation of the Initiative will certainly ensure that all government staff is well armored with adequate cyber-security health tool kits to safeguard the confidential data of the government by mitigating the cyber threats posed.

Success of the Initiative will certainly encourage more people and entities to adopt modules employed under the Initiative to safeguard their data from cyber threats.

*********************************************

About the author :

Bhumesh Verma is a lawyer with over 2 decades of experience in advising domestic and international clients on corporate transactions (M&A, Venture Capital, Private Equity, Startups, corporate advisory, etc.) and features in “The A-List – India’s Top 100 Lawyers” by India Business Law Journal. He keeps writing frequently on FDI, M&A and other corporate matters and is a guest faculty as well. He can be reached at [email protected].

 

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