25 September 2013

Is Aadhaar necessary or not? Business Standard,

The basic aim of Aadhaar is to make benefits directly available to people by eliminating intermediaries and fraud (for example, duplicate and fake ration cards), thereby saving the exchequer enormous leakages.

AadharThe Supreme Court has issued an interim order, not a final one, asking that no citizen should be deprived of benefits for not possessing an Aadhaar number or card and these should not be issued to illegal migrants.

This is likely to put a brake on the fast pace at which Aadhaar cards have been issued so far to more than 400 million people.

The breather of sorts now available can be used to re-examine the basics to see what is good and positive about the project and should be preserved and what is not and can be eliminated.

The final verdict of the court will no doubt ensure that the baby is not thrown out with the bathwater.

Aadhaar is a transformative innovation.

However, given the United Progressive Alliance’s attempt to take credit for it in the run-up to the parliamentary elections, it has sadly become a partisan matter -- with the Bharatiya Janata Party deciding to oppose the draft Bill in the parliamentary standing committee.

A consequence of the political logjam is that Aadhaar today has no statutory backing, a fact that must have influenced the apex court’s observations.

Yet, the cost and speed with which it has been rolled out bear testimony to both India’s skills in information technology, despite being poor, and the management skills that even its low-capacity state can bring to bear.

What Aadhaar says is that when it comes to IT and management, India is a First-World, not Third-World, country.

The basic aim of Aadhaar is to make benefits directly available to people by eliminating intermediaries and fraud (for example, duplicate and fake ration cards), thereby saving the exchequer enormous leakages.

On the issue of illegal migrants getting Aadhaar cards, it has long been held by the Unique Identification Authority of India that the card or number is a proof of identity, not citizenship.

It does not have the mandate or scope to check the citizenship of a person.

Once a person is found to be an illegal immigrant, the law mandates the authorities to deport him.

The courts can finally direct the authorities not to stop deportation simply because a person has an Aadhaar card.

Next comes the issue of privacy and security of information.

Although efforts have been made to draft suitable legislation to secure citizens’ privacy, they have been too slow.

Extensive electronic snooping by the authorities goes on in India.

The courts can take an initiative to secure citizens’ privacy by being more stringent in overseeing official snooping.

On the security of information stored by the Unique Identification Development Authority of India, everything should be done to strengthen it.

Finally, the question is if there is judicial overreach in India.

A government should be able to exercise its executive authority through executive orders under extant rules.

Otherwise, it will be difficult for the government to function, which will affect economic well-being.

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NBFC gold loans lose sheen:: Business Line

NBFCs have always been the first choice for gold loans as they process the papers quickly, disburse in cash, and do not question the purpose for which you want money. But this may no longer be the case. Last week, the Reserve Bank of India tightened regulations governing non-banking finance companies (NBFCs) lending against gold jewellery.
NBFCs have been asked to do due diligence of customers before lending money. Where the pledged gold is more than 20 grams, the ownership of jewellery needs to be verified. Also, strict KYC compliance has become a requirement and PAN has been made mandatory for loans above Rs 5 lakh. Rules have also been laid down for calculating the loan-to-value.
With these new norms, gold loans from banks could perhaps become more attractive. This is how.

HIGHER LOAN-TO-VALUE

Loan-to-value (LTV) refers to the amount of loan a borrower gets against the pledged gold — this is the margin of safety for the lender against fluctuation in gold prices.
The RBI capped the LTV of gold loan companies such as Muthoot Finance, Manappuram Finance and other NBFCS at 60 per cent in March 2012. But as there was no clarity on what should be the price of gold for arriving at loan-to-value, these companies added jewellery making charges and VAT to the price of gold and offered high LTV to customers.
For example, an enquiry last week revealed that Muthoot and Manappuram Finance offered around Rs 1,900-1,975/gram and India Infoline offered Rs 2,000/gram when the market price of gold then was Rs 2,775/gram.
This means the actual LTV worked to higher than the permitted 60 per cent.
The RBI has now stipulated that NBFCs should use the average of the closing price of gold (22-carat) of the preceding 30 days to arrive at LTV and add no other costs to it. This could lower LTV offered by NBFCs and bring them at par or make them worse off than banks. This is because banks have no cap on LTV for their gold loans. The assessment of risk is left to the individual banks. Some private sector banks even lend up to 75 per cent of value of gold.

ON-PAR PROCESSING TIME

With all these new measures, an NBFC may now take the same time to process your gold loan as a bank. With the usual address and identity proof, you will also be required to fill a detailed KYC form and provide a copy of the PAN card for a loan of Rs 5 lakh and above.
Also, if you pledge gold of more than 20 grams be ready to answer some probing questions about whose jewellery it is, when and where it was bought, and so on.
The loan processing time will increase as finance companies have been asked to give borrowers in writing the purity and weight of the pledged gold. Further, loans of Rs 1 lakh and above are required to be disbursed compulsorily by cheque, which means the borrower cannot expect to receive ready cash.

LOWER INTEREST RATE

With NBFCs losing out on their key attraction of ‘five minute loan approval’ due to the stringent norms, it may not help to still borrow on steep interest charges. NBFCs charge 24-27 per cent interest annually on gold loans.
Though they agree to reduce their interest rate on lower LTVs, it is still higher than what banks offer. For gold loans, PSU banks charge interest of 13-14 per cent while private banks charge up to 17 per cent.
Besides, on default, NBFCs do not wait for more than 18 months to auction the pledged gold to recover dues. Banks resort to auction only after 36 months.
This gives the borrower sufficient time to arrange for funds. The RBI’s new regulations, however, stipulate that NBFCs must have a transparent auctioning process and give adequate prior notice to the borrower. And, if the auction fetches money over and above the outstanding amount, the financing company is supposed to return it to the borrower.

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'Adopt uniform procedures for non-filers of I-T returns'


TaxTo check tax evasion, the Central Board of Direct Taxes has tightened norms to deal with 'no-filers' of income tax returns and asked its officers to follow uniform procedure in handling such cases.

"The existing procedure for monitoring cases of 'non-filers of I-T Returns'. . .has been examined by the Board. 

“It is felt that at present, cases of non-filers are not being uniformly monitored by the Assessing Officers due to lack of consistency in approach in dealing with such cases," the CBDT said in a communication to its top officers. 

Therefore, in order to streamline the processing of such cases and to ensure consistency in monitoring 'Non-Filers Monitoring System' cases by the Assessing Officers, the CBDT has issued "standard operating procedure".

As per the guidelines, the assessing officer has to issue letter to the assessee within 15 days of the case being assigned in NMS, seeking information about the return of income flagged in the system. 

In cases where the assessee has been identified and no return has been filed within 30 days of the time given in the letter, the assessing officer should consider initiation of proceedings as prescribed. 

The CBDT (Income Tax Department) has identified about 12 lakh non-filers and has been sending letters to them to file returns and pay taxes. 

As per the latest data, the tax department has issued letters in 245,000 cases. 

Following issuance of letters to non-filers, CBDT earlier said, about 344,000 returns have been received from the target segment. 

Such persons, it said, have also paid self assessment tax amounting to Rs 577 crore (Rs 5.77 billion) and advance tax of Rs 408 crore (Rs 4.08 billion). 

The department has also made it clear that it will to go after recalcitrant taxpayers and the exercise will continue till all potential non-filers are covered.