Can Aadhaar-Based Biometric Authentication At Atms Help Prevent Frauds?    Oct 28, 2016

October 28, 2016
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Reducing the black money circulation and curbing its creation requires the Government to promote the cashless economy. As on July 31, 2016, there were approximately 69.7 crore debit card and 2.5 crore credit cards in circulation. As reported by the Economic Times dated October 26, 2016, the transaction volume of credit and debit cards has gone up at a compounded annualised rate of 25% and 16% respectively over last 2 years. The RBI and Government are trying to encourage people to opt for the cashless transaction in an even bigger way. However, there's a difficulty.

Cashless payment options such as debit and credit cards are not as secured as they should ideally be, to give the user enough confidence to use them. The recent exposé of data leakages of 32 lakh debit cards brings forth the poor quality of existing security checks. The misuse of confidential information of the card holder is the biggest threat. Prevalence of Cash on Delivery (COD) option on e-tailing websites suggests that people still prefer to pay in cash, given a chance.

The situation might change in coming months. The regulator has been striving to ensure greater safety of cardholders' data and funds.

Last month, the RBI issued a circular in this regard addressing all Scheduled Commercial Banks including RRBs, Urban Co-operative Banks, State Co-operative Banks, District Central Co-operative Banks, Authorised Card Payment Networks, White Label ATM Operators, Payments Banks and Small Finance Banks. In this circular, RBI has clearly stated that the newly installed payment infrastructure should support EMV Chip and PIN and Aadhaar (biometric validation) system. Moreover, it also nudged addressees to ensure that all new card acceptance infrastructures deployed with effect from January 01, 2017, are enabled for processing payment transactions using Aadhaar-based biometric authentication also.

As per the Government data 107,06,24,708, crore Indians hold Aadhaar Cards. This has encouraged RBI to insist for Aadhaar based authentication of card payments.

So in 2017, you might use your finger impression or retinal scan to authenticate a transaction at Point of Sales (PoS) or at ATMs. Since fingerprints and eye scans are unique, instances of offline frauds may reduce substantially. The 'cashless' drive is likely to receive a greater push in coming days, thanks to this development.

Nonetheless, the old/existing infrastructure must also be upgraded, if we want to secure payment options in the real sense.

What's more can be done to ensure the safety of electronic payment options? Share your view here Facebook | Twitter

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India is perceived to be getting less corrupt these days. Numbers reflect this. Transparency International's Corruption Perception Index (CPI) ranked India 76th in 2015 which is 9 notches higher than 85th place India acquired in 2014. In other words, India has received fewer complaints about corruption in 2015 as compared to what it received in 2014. Corruption is considered to be one of the leading causes of the creation of black money, against which India is putting up a fight, these days. Close to 58% of the respondents to the survey recently conducted by the Transparency International, an international non-governmental organisation which is based in Berlin, Germany, feel that Corruption and bribery are some of India's biggest challenges. In 2012, nearly 72% respondents believed so. Things are changing, indeed.

But, this is not to say that, everything is hunky-dory these days. In fact, might be to your surprise, white-collar crimes are on the rise. For India to become a less corrupt state, white collar crimes must go down. White collar crimes and corruption go hand in hand, most often.

A report on white collar crimes in India released by Ernst & Young suggests that Serious Fraud and Investigation Office probed into 469 cases over last 12 years of which it examined 184 cases in the Financial Year 2015-16. Moreover, the report also presents an account of cases wherein CBI was involved. Out of 6,533 corruption cases, CBI probed into over last 10 years, 517 surfaced in last 2 years.

The report claims some more startling facts as well
  • The value of trades executed on the Bombay Stock Exchange (BSE) using fake or duplicate PAN cards amounts to Rs 4,000 crore.
  • Indians might have stashed US$ 181 billion (close to Rs 12,12,700 crore assuming the Rupee-Dollar exchange rate of 67) worth black money in global tax havens.
  • Data security of nearly 32 lakh debit cards has been compromised at ATMs
How to interpret this?
Changing perception about India reflects that. Some initiatives undertaken by the Government might have helped in influencing general opinion about the country. Implementation of the Undisclosed Foreign Income and Assets (Imposition of Tax) Act, 2015 which aimed at bringing black money stashed in foreign banks back to India didn't attend much success. Yet Indians reported Rs 4,147 crore worth unaccounted foreign assets under the compliance window that Government had provided.

On the contrary, the Income Declaration Scheme (IDS) delivered results on expected lines. IDS, unlike free pardon schemes offered in the past, was aimed at tightening up screws on tax evaders who managed to avoid tax liabilities skilfully, over all these years. Active search operations and raids carried out by the Income Tax Department must have sent shivers down the spine of tax evaders, which in turn made them declare their black wealth. Moreover, the Government warned of stricter actions once the window period given under IDS elapsed. The Government is actively entering bilateral agreements with several nations which are famous among tax dodgers. In future, this initiative is expected to yield desired results.

Strict implementation of The Benami Transactions (Prohibition) Amendment Act, 2016 also holds the key. Black money earned through corruption is often stashed into high-value real estate transactions.

All said and done, unless white collar frauds are prohibited, and high-profile corporate-political nexus receives severe blows, India is unlikely to report any substantial improvement on Transparency International's CPI. Let's not forget, in the year 2000, India was perceived to be less corrupt and had secured 69th position, 7 notches better than the current ranking.

Let's see where we are headed this year.


Between 1938-1946 and 1954-1978, Rs 10,000 notes were in circulation. While there has been a growing demand to discontinue even Rs 500 and Rs 1,000 notes, the RBI and Government hold contrary ideas. RBI, based on its assessment of currency needs in the system, advises the Government on printing money or discontinuing circulation of notes of a particular denomination.

The Hindu Business Line, on October 21, 2016, published news that the RBI has been in the process of introducing Rs 2,000 bank notes into circulation. "The Reserve Bank of India has very nearly completed preparations for introducing this new high-value currency, sources said. The notes have already been printed, and their dispatch from the currency printing press in Mysuru has commenced", the newspaper brought out.

Although the news remains unconfirmed, neither the Government nor RBI has denied any such development either. Read in one way, issuance of Rs 2,000 notes would help RBI cut costs. Read in another, it may give rise to social evils.

Let's take a closer peek:

If RBI introduces Rs 2,000 notes, they will make your wallets lighter. Apart from that, India would save on costs associated with supplying currency notes. To print the Rs 1,000 note, the RBI shells out Rs 3. This excludes the logistics costs. Issuance of Rs 2,000 notes would further improve the cost-value proportion. But benefits end right here.

Circulating high denomination notes not only gives rise to chances of black money formation but also exposes a country to the threat of fake currency. It's rather simple and cost effective to re/produce counterfeit currency of high denomination. Do you remember, until recently many shopkeepers were wary of accepting the Rs 500 note as there was a possibility of these being fake. Then imagine what would happen if counterfeit Rs 2,000 currency notes were in circulation. High-value notes raise the inflationary risks significantly.

To read more about this story and Personal FN's views over it, please click here.


Some of you might find the process of investing in mutual fund schemes very cumbersome as it involves a lot of paperwork. Do you recollect the number of times your mutual fund advisor used jargon such as "FATCA form", "KYC" and "bank mandate" while explaining the formalities to you? And when you invest in Systematic Investment Plans (SIPs) offered by mutual fund houses, paperwork increases even further. Sometimes, investors blindly sign in the slots their mutual fund advisor has ticked, confused and bored by the jargon and bureaucracy. Although, investors themselves are expected to fill in the applications, most often, their advisors/intermediaries do this activity for them. Complicated processes result in loss of time and eventually investors' trust.

History won't repeat itself!

The Bombay Stock Exchange (BSE), recognising the impetus to address these practical difficulties, recently launched iSIP—a feature that allows mutual fund investors to invest in SIPs in a paperless form. invest in SIPs in a paperless form. India's oldest stock exchange will offer this facility on its 'StAR MF' platform—a web-based order routing system for allotment and redemption of mutual fund units. The Mutual Fund Intermediaries (MFIs) and Independent Financial Advisors (IFAs) registered with Association of Mutual Funds in India (AMFI) can access BSE StAR MF platform to buy and redeem mutual fund units for their clients.

What will change for investors?
  • Investors save a lot of time, as the new facility involves no paperwork
  • Lesser rejections due to errors that otherwise happen while physically filling up hard-copy applications
  • iSIP will provide various payment options including net banking and ECS to the investors

Intermediaries should benefit too...
  • Reduction in paperwork would lessen the workload on the back office function/department of intermediaries considerably.
  • Back office personnel can focus on other value-added services.
  • Faster processing of applications would result in greater customer satisfaction.

Investing in mutual funds is a time-tested approach to channelising your savings into equity and debt markets. Investing in equity oriented funds through SIPs offer additional advantages such as rupee-cost averaging; this facilitates reducing the risk associated with timing the market.

To read more about this story and Personal FN's views over it, please click here.

Every month, your company must be deducting your tax at source. However, whether it pays it on your behalf is something unknown to you. If you fail to meet the deadline of advance tax payments, you are liable to pay the penalty. The Central Board Of Direct Taxes (CBDT) will now give you an opportunity to tally the tax deducted by your company and tax paid on your behalf, by updating you on a monthly basis through SMS. It will also help rectify errors about the amount of tax deducted and tax deposited.

To begin with, this facility is available only to salary holders, but CBDT intends to expand the scope of this initiative even to 4.4 crore non-salaried tax payers.

PersonalFN is of the view that, such moves help improve the transparency in the system and thus, should be welcomed

Cybersecurity: Cybersecurity refers to the measures taken to keep electronic information private and safe from damage or theft. It is also used to make sure these devices and data are not misused. Cybersecurity applies to both software and hardware, as well as information on the Internet, and can be used to protect everything from personal information to complex government systems.

(Source: Investopedia)

Quote: "The fact that people will be full of greed, fear or folly is predictable. The sequence is not predictable."-Warren Buffet


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