Consumer Friendly RBI Circulars

Reserve Bank of India (RBI) issues Circular for enhancing the security of online monetary transactions:

Background:

With the increased use of credit and debit cards in the country, RBI has been reviewing various options to enhance the security of online transactions.

Circular:
With the passage of the Payment and Settlement Systems Act 2007, the Reserve Bank has got the power to regulate all online transactions.

Reserve Bank of India has issued a Circular on February 18, 2009 making it mandatory for banks to clear online card transactions only after they are authenticated by a separate password. Further in the same Circular, RBI has also made it mandatory for banks to send SMS and online alerts for all online transactions exceeding Rs 5,000.

“It would be mandatory to put in place a system of providing for additional authentication / validation based on information not visible on the cards for all online card not present transactions,” the RBI said, in a circular issued to all banks.

These rules will be effective from 1st August, 2009. This directive on online verification has been issued under Section 18 of the Payment and Settlement Systems Act, 2007.

The central bank will also shortly prescribe security measures to be employed for card usage in interactive voice response (IVR) transactions, where cardholders punch in their card details into the telephone to make payments. However, such transactions are minimal.


Reconciliation of transactions at ATMs failure-time limit:

Background:

The use of Automated Teller Machines (ATMs) for cash withdrawal has been increasing in the country. However, of late, the Reserve Bank has been receiving a number of complaints from bank customers, regarding debit of accounts even though the ATMs have not disbursed cash for various reasons.
Banks take considerable time as much as 50 days in reimbursing the amounts involved in such failed transactions to card holders.
The Reserve Bank has concluded that delay of the magnitude indicated above is not justified, as it results in customers being out of funds for a long time for no fault of theirs. Therefore, it was decided that, banks shall reimburse to the customers the amount wrongfully debited within a maximum period of 12 days from the date of receipt of customer complaints. This decision was communicated to the banks vide an RBI circular dated October 23, 2008. However, RBI has observed that the banks have not taken adequate care to percolate these instructions to their branches as evident from continuing complaints in this regard.

Circular:

RBI has therefore issued a Circular dated February 11, 2009 to banks asking them to strictly adhere to the time discipline indicated in the above mentioned circular. Non-adherence to the time discipline shall attract penalties prescribed under the Payment and Settlement Systems Act 2007.
This directive is issued under Section 18 of Payment and Settlement Systems Act 2007.

Section 18 of the said Act gives the RBI broad-based powers to give directions to “system providers or the system participants or any other person either generally or to any such agency and in particular, pertaining to the conduct of business relating to payment systems”. These orders can be given by the RBI if it is satisfied that it is in public interest.

IMPACT:

These Directives by the Reserve Bank of India surely are a welcome step in ensuring safe online & ATM transactions.

Due to this frauds through online transactions may soon see a dramatic decline. At present, anyone who has access to information printed on credit / debit cards, such as the card number & the Credit Verification Value (CVC) number, can misuse the card online. With this Circular in place, this loophole will now soon be fixed and the people can breathe a sigh of relief.

Online payment made through credit cards or online debit of bank accounts while filing compliance documents with MCA, SEBI, etc. will also be more secure and safe.

Also the Circular which puts a time-frame for banks to reimburse to the customers the amount wrongfully debited through ATMs, within a maximum period of 12 days from the date of receipt of customer complaints, is also a benefiting one.

These Circulars and the measures by banks in ensuring safe and secure banking were very much required and are very timely. All this will give confidence to people who were risk averse to online banking transactions or were away from ATMs/online transactions, due the news of people getting duped to the tune of thousands & lakhs of rupees.

CS. Monika Bhardwaj
Anand Wadadekar

Towards Greener Environment - Carbon Credit

CS. Monika Bhardwaj, B.Com (Hons.), ACS
Anand Wadadekar, M.Com, M.A (Eco), MBA, AMFI

Environmental Management:

Environmental management is not merely managing the environment but it’s the management of human interaction with; and impact upon the environment in order to conserve the environment for mankind’s sake. Managing environment is the biggest issue these days which is being faced by everyone everywhere across the globe. Initially, the Environmental Law was perceived as one of the most important tools of environmental management. However, Protection of environment from degradation has now not just remained a legal issue but a management issue as well.

It is observed that mere compliance of environmental law on pa does not result in effective control of pollution. An alternate paradigm for pollution abatement for more effective methods of environmental control beyond traditional "command-and-control (CAC)" style regulation is to use economic instruments (EIs) or market-based instruments (MBIs). Introduction of market based instruments will help to reduce emission of pollutants, pollution and will surely increase social responsibility of industries. Eco-taxes, tradable emission limits and negotiated agreements are some of the types of instruments which can be used effectively and efficiently.

In India, environmental management is largely carried out at the state level. This is true for natural resources such as forests and land as well as for air, water quality and solid waste pollution.

Green and Grey Products:

Almost every product has multiple environmental impacts. The products and their manufacturing processes, consume energy, use renewable and non-renewable material and generate emissions. A product is ‘green’ when its environmental and societal performance, in production, use and disposal, is significantly improved and improving in comparison to conventional or competitive product offerings, i.e. they are sustainable from the environmental point of view. A Green Product is environmentally preferable and leaves minimum environment footprints.

When a product is unsustainable from the environmental point of view, it is termed as ‘grey’.

Market Based Instruments (MBI) for Environmental Benefits:

“Market Based Instruments refer to the environmental policies which encourage change in technology, behaviour or products through financial incentives like subsidies, taxes, price differentiation or market creation.”

CARBON CREDIT - As one of the most effective MBI:

What does Carbon Credit mean?

A permit that allows the holder to emit one ton of carbon dioxide; Credits are awarded to countries or groups that have reduced their green house gases (GHG) below their emission quota.

Its goal is to stop the increase of carbon dioxide emissions. The Kyoto Protocol presents nations with the challenge of reducing greenhouse gases and storing more carbon. A nation that finds it hard to meet its target of reducing GHG could pay another nation to reduce emissions by an appropriate quantity. The carbon credit system was ratified in conjunction with the Kyoto Protocol.

For example, if an environmentalist group plants enough trees to reduce emissions by one ton, the group will be awarded a credit. If a steel producer has an emissions quota of 10 tons, but is expecting to produce 11 tons, it could purchase this carbon credit from the environmental group.
The carbon credit system looks to reduce emissions by having countries honor their emission quotas and offer incentives for being below them.

Indian Initiatives for environmental management:

Comparing the globally placed carbon trade, India seems nowhere near.

However, Policy Statement for Abatement of Pollution, 1992 by the Government favours the use of MBIs for pollution control, wherever feasible. In the recent years, compulsion to comply with Euro II emission norms is a very confident step towards controlling air pollution.

It has now become essential for companies to make environmental considerations as a part of their business decision making.

The enactment of the Information Technology Act, 2000 has enabled the industry to kick-start the use of electronic mode as a valid legal medium for carrying out its business operations which were until now done compulsorily on paper. This includes initiatives like MCA e-filing, Income Tax e-filing, SEBI Reporting and other electronic communications via, emails and video conferencing.

What we professionals can do?

India is still not a signatory to the Kyoto Protocol, which in a way, is a road-block for effectively carrying out environmental management by the industries. Currently companies like Jindal Stainless, Essar Steel, Hyderabad Chemicals, Paschim Hydro Energy P. Ltd, The Andhra Pradesh Paper Mills Ltd, have been making use of market based instruments like Carbon Credits in their businesses.

It is a need of the hour for Company Secretaries, Chartered Accountants, Lawyers, Cost Accountants and other Management professionals to put up their say in the management of their respective organisations (financial, manufacturing or services) and be a part of the decision making more proactively & aggressively.

At the organisation level:
1. The various industry Chambers like FICCI, ASSOCHAM, CII should take-up the issue of introducing market based instruments like Carbon Credits through a legal framework with the Government. These trade organizations can also come up with some award program to the Companies which religiously follow the norms. Such award program will work as a motivating factor in the industry to adopt the norms suo-moto.
2. Introduction of corporate-run carbon funds
3. Introduction of Government-run carbon programmes. (Just recently Multi-Commodity Exchange (MCX) has taken a pioneering effort to launch Carbon Credit Futures in India and has been recognized as India’s First Green Exchange)
4. We, professionals, should stress upon and make the company management aware of the benefits of such market based instruments
5. Awards like ‘Best Green Idea’ for employees coming up with suggestions; ideas, ways, etc. should be introduced.
6. Ask the management of our respective organisations to take help of the MBIs wherever feasible.
7. Computer-based entrance tests for educational courses.
8. Organizations can also come up with policies for reducing wastes like for encouragement of use of metal water bottle in the organization in place of plastic water bottles which is sanitary, easy to clean and is capable of being used over and over.
9. Organizations can also encourage use of reusable lunch bags / cups etc. in their cafeteria / lunch rooms which helps in avoiding use of plastic / paper, use of hand towels in toilets and lunch rooms instead of paper towels and electric dryers.

On individual level, we professionals can contribute in the following way:

1. We, professionals, can help our respective organizations in implementing effective waste management systems. We can also assist in registering our manufacturing units under Indian Green Building Council and products under Bureau of Energy Efficiency voluntarily; though for some the registration is mandatory.
2. Internal policies may also help in encouraging paperless communications, use of common transport etc. as far as possible. Such policies may atleast ensure minimum use of paper (double side printing), avoidance of wastage and re-cycling of waste paper and therefore, saving trees – a natural resource.
3. We can also assist in encouraging our fellows in full utilization of software applications, for example execution of daily work in soft copies rather than printing (Eg. Excel Macros for data processing, analysis, etc.). This way, we will solve two problems i.e. space for storage of physical records and availability/ accessibility of all records at a centralized server hence, reducing dependence on human factor. We all are aware that most of the official communications can be done through email/video conferences. We professionals can advise our managements / fellow employees to adopt such practices.
4. We, professionals, need to refer to many laws for which we purchase bulky books every year. Here, we can purchase CDs instead of those books, which will reduce substantial use of paper and storage and will be easy to use.
5. We can also adopt and advise good practices of reducing carbon footprint for example using CNG gas in our cars, maximum use of public transport system.
6. We can advise our managements to come up with policies to reduce wastages, be it paper, electricity or any other. Policies on travels can also be modified to discourage air travel at all levels of management. A small change can add a big thing to the concept of “Go Green”.

Conclusion:

It’s the need of the hour to think very seriously on reducing environment loss by religiously following & implementing and innovating techniques & ways to contain the same. This is a high time to call a revolution for reducing carbon footprint in order to preserve what’s left of the ozone layer, which is a protective layer between sun’s harsh ultra violet rays and the living beings. Otherwise, the day is not far when the world will be full of hunger; sun burnt, blind people, scary sounds and many more incurable diseases.