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Impact of digitalisation on the Indian banking sector

Chetna Alagh

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Digitalization is the new buzz or the latest expression in all the sectors. It refers to the use of digital technologies to change a business model and further provide new revenue and value-producing opportunities. The world has seen a rapid advancement in technology over the past several decades. Technology has left an indelible mark on everything and anything that human beings can fathom. There has been seen technology outburst in all sectors and banking has been one of the sectors to adopt information technology. All over the world, banks are making a tremendous stride towards digitalization to cope up with the competition and provide their clients with the best services.

DIGITALISATION IN THE BANKING SECTOR AND ITS EVOLUTION

“Digital Banking” refers to digitalizing the traditional methods of banking to conduct banking transaction more smoothly. Contrary to traditional banking, digitalized banking aims to make versatile computerized products and services to fulfil the requirements of their digitalized clients. The introduction of digital banking has revolutionized the banking sector and modified the entire procedure bank transfers, it has facilitated the purchasers assisting them to see their account details, pay online bills and transfer money from one account to the opposite during a faster way. This has helped the end-user to enjoy a methodical financial life, further embracing hassle-free online banking.

The need for computerization was felt within the Indian banking sector within the late 1980s, where there was a need to enhance the customer service, book-keeping and MIS reporting. In the late 1980s, India was marred by various financial reforms and therefore the banking sector felt a requirement to enhance customer services and computerization of recording and accounting of knowledge. A committee was found out in 1988 by the Federal Reserve Bank of India which was headed by Dr C. Rangarajan to review Computerization within the Banking Sector. After the introduction of the Liberalization, Privatization, and Globalization (LPG) policy, the method of digitalization picked up the pace alongside the change within the Indian Economy.

The method of computerization gained pace with the reform within the Indian economy in 1991-92 at the time when private and foreign banks entered the Indian market meaning to digitalize the economy and improve the services provided by the general public sector banks to the purchasers. 1996-1998 were the years of internet banking/e-banking adoption in India after which, within the year 2000, the govt of India enacted the Information Technology Act, 2000 to provide legal recognition to electronic transactions and other means of electronic commerce.

The digitalization within the banking sector is often seen in India since the establishment of ATMs. Further developments like Telebanking, Electronic Compensation Service, Electronic Funds Transfer system, MICR, RTGS (Real-Time Gross Settlement), Point of sale terminal, etc. are often seen within the banking sector. E-banking has resulted in reducing costs drastically and has helped generate revenue through various channels. Various steps and initiatives had been adopted by the RBI and National Payment Corporation of India in strengthening the Payment and Settlement Systems in banks just like the launch of United Payments Interface (UPI) and Bharat Interface for Money. It is due to such initiatives and platforms, customers now don’t have to store or carry cash alongside them anymore, they will now make transactions anywhere at any time.

CURRENT STATUS OF INDIA IN THE DIGITAL SPACE

Today banks aim to provide fast, accurate and quality banking experience to their customers. Today, the topmost concern for all the banks in India is digitization.

The Indian Government is at a high rate is promoting digital transactions. The launch of the United Payments Interface (UPI) and Bharat Interface for Money (BHIM) by National Payments Corporation of India (NPCI) are the 2 major significant steps for innovation within the Payment Systems domain in India.

UPI is a mobile interface where people can make instant funds transfer between accounts in several banks supported virtual address.

As per the RBI Report of 2016-17, there are 2,22,475 Automated Teller Machines (ATMs) and 25,29,141 Point of Sale devices (POS). Implementation of electronic payment system like NEFT (National Electronic Fund Transfer), ECS (Electronic Clearing Service), RTGS (Real Time Gross Settlement), Cheque Truncation System, Mobile banking industry, Debit cards, Credit Cards, Prepaid cards have all gained wide acceptance in Indian banks. These are all remarkable landmarks within the digital revolution within the banking sector. Online banking has changed the face of banking and has achieved an important change in banking operations.

National Electronic Funds Transfer (NEFT) is that the most ordinarily used electronic payment method for transferring money from any bank branch to a different bank in India. It operates in half-hourly batches, at the present, there are 23 settlements.

Real-Time Gross Settlement (RTGS) is primarily used for high-value transactions which are supported ‘real-time’. The minimum amount to be remitted through RTGS is Rupees Two Lakhs. there’s no upper limit.

Immediate Payment Service (IMPS) is a moment electronic funds transfer facility offered by National Payments Corporation of India (NPCI) which is out there 24 x 7.

The usage of Prepaid payment instruments (PPIs) for the acquisition of products & services and funds transfers has increased considerably in recent years. Transactions through PPI Cards which include mobile prepaid instruments, gift cards, foreign travel cards, corporate cards & mobile wallets have jumped drastically from Rs.105 billion and Rs. 82 billion respectively in 2014-15 to Rs. 277 billion and Rs. 532 billion respectively in 2016-17.

ROLE OF ARTIFICIAL INTELLIGENCE AND DATA ANALYTICS

Artificial Intelligence has acted as a backbone in the E-Banking and has continuously been contributing to the banking industry for a very long time to provide a greater level of value to us, reducing the risks, providing better opportunities as the financial engines of our modern economy.

AI is helping with the coming up innovations and transforming the way the needs of the clients are fulfilled and acts as a major role. Artificial Intelligence is also working on providing personalized support, better customer experience, time-efficient, reduced risks and cost-saving.

Better performance, higher profitability, and risk reduction are the three main goals which banking and financial sectors are trying to achieve at the moment to keep up with the competition in the world.

In this data-driven world, performance is dependent on those big data technologies which can store and manage data in real-time. Banks even have to mandatorily lend loans at a lower rate of interest to priority sectors like agriculture, housing, education. Data Analytics has played an important role in reducing cost, development and increasing client base for the banks.

ADVANTAGES OF DIGITALISATION IN BANKING SECTOR

Digital banking lately is not just confined towards using the web to access the banking services, as is typically perceived, however, it likewise incorporates of a whole exhibit of banking services delivered or consumed using technology. Advantages of digitalization within the banking sector are:-

PAY, RECEIVE OR TRANSFER MONEY EASILY

Digitalization within the banking sector has offered the use of various sorts of services by sitting reception alongside no time restrictions. It has also reduced the gap between rural and concrete areas. With the digital payment modes or through E-Banking one can send money from one account to the other account of any bank branch from anywhere and anytime. Modes like USSD (Unstructured Supplementary Service Data), E-Wallets, UPI, Paytm other banking applications allow us to try to do so.

WRITTEN RECORD

Digitalization has offered us to take care of our record, track our spending and budget planning. By using online applications, we get a record of each transaction we make. Applications automatically record the transactions within the passbook or simply have the records maintained inside the E-Wallet App. Thanks to digitization, more data are going to be available to banks. Banks can make use of digital analytics to form sound data-driven decisions. The threat of faux currency is going to be reduced as there’ll be a rise in cashless transactions.

IT IS EASY AND CONVENIENT

Digitalization has created a simple and convenient lifestyle for the purchasers and therefore the financial organization, as now the utilization of physical cash has become very less as compared to digitalized cash and there’s no need carry along loads and a lot of cash from one place to another. The danger of human error has minimized which has led to a rise in consumer loyalty. Services like NEFT (National Electronic Fund Transfer), RTGS, etc. have also made it easy to transfer the amount from one bank to another very conveniently and quickly.

ONLINE BILL PAYMENT

One of the good advantages of online banking is online bill pay. instead of having to write down checks or fill out forms to pay bills, once you found out your accounts at your online bank, all it takes is just simple click — or maybe less, as you’ll usually automate your bill payments. With online bill pay, it’s easy to manage your accounts from one central source and to trace payments into and out of your account.

DISCOUNTS FROM TAXES AND OTHER INCENTIVES

Many discounts were announced by the govt and therefore the financial institution to encourage digital payments. If one uses digital modes for a payment up to 2000 INR, one gets full exemption from service tax. Nowadays many mobile application operators also provide some incentives like cash back and other promotional offers which have also provided benefits to the consumers. One also gets 75 per cent discounts on fuels and 10 per cent discounts on insurance premiums of state insurers etc.

Challenges Involved in Digitalizing Banking Activities

Digitalization has many obvious advantages such as accessibility to information, easy and immediate communication, low cost, reduced time and ability to share information, new jobs, and increased commercial competition. Even though there are plenty of advantages in going digital and enjoying the comfort of going digital but digitization in banking does not come without disadvantages. Below is a list of some of the challenges faced due to digitalization in the banking sector:

Cybercrime: Cybercrime is the use of digital instruments to further illegal ends, such as committing fraud, violating privacy, or stealing identities. This mode does not require the physical presence of the person, and one can execute such a crime from a faraway place, sitting comfortably in front of their computer/mobile screens. As the information and services have been digitalized the risk has been increased for both the bank and the consumer.

ATTAINING APPLICATION PERFECTION

There is an immense feeling of consolation while using smartphones with various applications and features. The introduction by banks and financial institutions of application has progressively offered comfort and extravagance of observing costs at anywhere and time. It has made it easy for consumers to enjoy the services provided by the bank through mobile applications. But these associations have omitted that for several people these services are inaccessible as some can’t afford mobile and a few don’t skill to work these applications. Nonetheless, most of those applications are frequently ridden with bugs and also face various performance issues. it’s hard to explore these apps, once in a while, and that they frequently crash.

INEFFICIENT AT COMPLEX TRANSACTIONS

Worldwide, business-oriented banks like Chase have global transaction capabilities, like the power to send payments to quite 35 different currencies worldwide, that online banks won’t be ready to master. Without a real-world presence, most online banks can’t even offer the services of a notary, which require an in-person visit and necessary for many important financial transactions like buying a home.

Decreasing Quality at the cost of Speed: In the surge of wanting to convey products and services at an accelerated speed, companies regularly tend to compromise on the standard of the application. The standard-issue is that there’s nothing of the type as a touch bug; a bug may be a bug; it can harm the smartphones easily. There are a couple of cases of associations purposely choosing to disregard deserts in products and programming even before the thing hit the market.

TECHNOLOGY UPGRADE

Technology isn’t constant, it always keeps on evolving. As technology develops, more and more banking services are digitized to deal with the competitive market. Thus, it becomes difficult for consumers to stay up with these advancements and learn accordingly. As an example, an adult man after learning the banking application with difficulty started using it but some days later as technology advances, new features and updates are released by the bank on its applications then it again becomes difficult for that man to find out the updated app which mostly happens in the older population of the society and then they have to go back to the traditional ways of banking.

AUTHENTICATION ISSUES

The main issues which are mainly faced by the banking authorities is the issue of authentication of their customers. The instructions which have virtually been provided by the Customer have originally been lodged or requested by him/her only or someone is personating on behalf of him is the main issue. Even after enacting various different measures like OTP, PIN, SMS/CALL verification relationship numbers, customer ID, etc. for securing the authentication of the consumers, the Bank and Cyber Frauds are increasing day by day and have emerged as a major challenge before the Cyber Cells and the concerned authorities.

SUPERHEATING WITH INNOVATION

Superheating the marketplace by offering imaginative services isn’t simply wanted, yet also, it required remaining on top of things and attracting a good customer base. Particularly with a huge base of youthful users, it becomes imperative to acknowledge the institution within the consistently becoming and competitive marketplace. In any case, financial institutions are frequently reluctant to require the jump, as they know that things can reverse discharge and cause moment reactions from perturbed customers.

LEGAL FRAMEWORK OF E-BANKING

E-Banking is no different business it is just banking utilizing Internet Channels. Banking is directed by RBI under RBI Act Subject to licensing Law regarding Electronic documents which are contained in the Information Technology Act 2000 as amended by the Information technology Act 2008.

Various provisions of law, which are applicable to traditional banking activities, are also applicable to internet banking. However, this does not overcome various problems, and therefore there is an urgent need for introducing stricter rules and regulations specific to meet the problems of e-banking. The legal framework for banking in India is provided by a group of enactments, viz.

The Banking Regulation Act, 1949; the Reserve Bank of India Act, 1934 and Foreign Exchange Management Act, 1999 are few among many such legislations. It is mandatory on the part of all entities to obtain a license from Reserve Bank of India under Banking Regulations Act, 1949 to function as a bank. Besides, banking activities are also influenced by various enactments governing trade and commerce, such as The Indian Contract Act, 1872, the Negotiable Instruments Act, 1881, Indian Evidence Act, 1872, etc.

Even after having a plethora of laws regulating e-banking yet there exists a grey area, which has neither been spelt out properly nor has there been any workable modes of implementation suggested by the Constitutional institutions.

CONCLUSION

Business Analytics and AI (AI) has the potential to bring a serious change. Robotics, enabled by AI, is predicted to be the longer-term game-changer within the banks. Many private banks are getting to deploy Robots for customer service, investment advisory and credit-approval process to enhance the services and be cost-effective within the end of the day. Digital Banking is going to be the foremost preferred sort of banking within the coming years.

Indeed, even as the COVID-19 pandemic claims a harsh cost for the economy, it’s catalyzing digital transformation across business models, channels and touchpoints. Fundamental this move is that the requirement for more noteworthy hierarchical nimbleness likewise as closer binds with clients during a changing world request. the technique for computerized change, in any case, is unpredictable and tedious for organizations likewise as buyers. Banking and payments, basic mainstays of the economy, are among the center territories that have seen a genuine uptick in computerized contributions and selection. While going advanced isn’t new, the pandemic has fundamentally quickened the reception of computerized innovations, with extensive ramifications for the more extended term of the financial area.

The digitalization has grown in every sector. As all the things have pros and cons, the same goes for the digitalization in the field of banking. The cons of digitalization carry the danger of fraud. The Linking of bank accounts with other Information’s have led a way for the criminals. The only way out is to have strict rules and regulations and the security system needs to be revised. The digitalization cannot be taken back to the old way but, the new way can be made safer with stringent rules and regulations.

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Opinion

PUNJAB CABINET FORMATION APPEARS TO BE INCLUSIVE AND BALANCED

Pankaj Vohra

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The new Punjab Cabinet appears to be inclusive and aimed at reaping political dividends in next year’s Assembly elections. However, it is too early to predict whether the Congress would be able to keep its flock together, given Captain Amarinder Singh’s dissatisfaction with the party and the omission of his close associates in the ministry. There is no one in the Cabinet who has ready access to the former Chief Minister and it is evident that bridges between him and the new leadership have been burnt forever. Therefore, it would not come as a surprise if the Captain asks the new government to take a floor test within one month or so. His camp has been watching the developments very closely and it is virtually certain that he would be severing his links with the Congress shortly. He is keeping his options open and is likely to take advantage of a possible tussle between Charanjit Singh Channi, his successor and Pradesh Congress president, Navjot Singh Sidhu. Differences between the two have already started over the choice of officers and Sidhu presumes that he shall be the CM after the polls next year while Channi is no green horn, who would allow his advantage to fritter away. The Congress High Command has to assess the unfolding drama very objectively and pragmatically in order to keep the MLS from deserting the party. The Captain is a very astute and perceptive politician who shall make his moves swiftly once the appropriate time arrives. In this context, it would have been better to include someone close to him in the ministry in order to ascertain what all was going on in his mind or camp. In 2016 when he had threatened to form his own party, Rana Gurmeet Singh Sodhi had persuaded him to rethink. This time Sodhi who acted as an interlocutor for the Congress between the Captain and Sidhu at one stage, is out and none of the others who are in the ministry can claim to enjoy proximity which would provide them access to understand Amarinder’s mind. Region wise the new ministry has 9 from the Malwa belt, four from Doaba and the remaining five from Majha. There are nine Jat Sikhs in the new government besides three Dalits, one OBC, four Hindus and one Muslim. The ministry gives an impression that it has been constituted to counter possible threat from the Akalis and the Captain without taking into consideration that the Aam Aadmi Party (AAP) which could emerge as the `X’ factor, closer to the polls. This political change may occur when the Congress decides to announce its list of nominees and those who would be left out may gravitate towards the Captain or AAP. There are indications that the Captain could form his own party which may have an electoral understanding with the BJP. He enjoys immense support amongst the Hindus of Punjab who view him as a nationalist figure. Therefore, to offset that perception, the Congress has included four influential Hindu faces in Om Prakash Soni, one of the deputy CMs, Brahm Mohindra, Vijay Inder Singla and Bharat Bhushan Ashu. The Captain has sounded the bugle and this war with the Congress could alter the political scenario in the State. Thus there is a huge responsibility that has been placed on the shoulders of the new government and the Congress High Command.

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Opinion

Taliban takeover and Russia’s strategic miscalculation

Russia will commit a strategic blunder by supporting the Taliban regime as the latter is not the legitimate voice of the Afghan people. This move will further isolate Moscow globally.

Nalin Kumar Mohapatra

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The rapid changes which occurred in Afghanistan after the violent takeover by the Taliban, ousting the civilian government headed by Ashraf Ghani are generating a lot of questions having larger geopolitical implications for both global and regional geopolitics. At the same time, the unending human sufferings like (flow of refugees, suppression of women and minority communities and denial of basic human rights to the common people) are also evident in Afghanistan following the forced takeover of power by the radical Taliban. Though these consequences are expected before, if the Taliban capture power. It is a well-known fact that the Taliban is created and patronized by Pakistan since the 1990s to achieve its diabolical strategic goals. Thus, what one witnesses is a new kind of geopolitical cauldron. Similarly, Afghanistan which has made tremendous progress in the socio-political spheres at the domestic level for the last 20 years (in the post-Taliban 1.0 era) including in the direction of deepening the democratisation process is reverting to the era of the 1990s. These two intricating developments are raising a lot of fundamental questions in the context of future of post-Nato Afghanistan.

Just after the ouster of the Ghani government, the Taliban sent a delegation to Pakistan which confirms the fact that Islamabad is the mastermind of this radical and terrorist organisation. Pakistan as reported has also deputed its high officials including the chief of ISI who supervised the illegitimate government formations by Taliban in Afghanistan. At the same time, China’s Ambassador in Afghanistan Wang Wu has already held talks with Taliban and assured support including financial assistance. This is a well-known fact that both China and Pakistan are hand in gloves with Taliban. But the most interesting thing that needs to be highlighted here is that Russia is also mending fences with Taliban despite knowing the fact that it is a terrorist group and a “banned organisation” in Russia. Just after the coup in Afghanistan, on 17 August 2021 Russian Ambassador Dmitry Zhirnov met Taliban leaders and gave an appalling statement as reported in Reuters. Zhirnov stated that “There is no alternative to the Taliban in Afghanistan”. He mentioned further that “The mood in Kabul can be described as one of cautious hope.”

By overlooking the ground situation, the Russian Ambassador to Afghanistan certainly misled the global community. The recent bombing at the Kabul Airport carried out by terrorist group ISKP (another terrorist group operating in Afghanistan under the patronage of Pakistan) also proves the fact that the Russian Ambassador’s statement is far from the existing reality in post-Nato Afghanistan.

It may be recalled here that it is not only the Russian Ambassador to Afghanistan who gave a statement on supporting Taliban, even the Spokeswoman of Russia Foreign Ministry Maria Zakharova in her response to the Press on 19 August echoes the statement given by Zhirnov. Zakharova stated, “ The positive signals transmitted to us from the Taliban leaders regarding their plans for the country’s future.” The Statement of Zakharova is quite strange because the whole world is criticising the Taliban’s illegal and hostile move but Russia is keeping its option open while dealing with Taliban. This implies Russia is giving patronage to the radical terror group Taliban along with China and Pakistan. The subsequent telephonic conversation between Russian President Vladimir Putin and Chinese President Xi Jinping also gave a signal that Russia is interested to work closely with Taliban in Afghanistan.

While evaluating Russia’s stand towards Taliban, it appears that Moscow does not follow a consistent policy. It is a common fact that Russia is the worst victim of terrorism over the years. A number of studies suggest that many of the Northern Caucasian militants had taken training from Taliban in the post-1995 phase. Reports suggest, along with Taliban, Pakistan is supporting some of these militants and terrorist groups that are currently operating illegally in Russia. Moreover, Russian policymakers and analysts have also accused Pakistan of harbouring Chechen terrorists.

In the post 9/11 phase, Russia formed Collective Security Treaty Organisation (CSTO) by including post-Soviet countries like Tajikistan, Kyrgyzstan, Kazakhstan, Armenia and Belarus just to checkmate the flow of drugs and narcotic substances and radical extremism from Afghanistan. Russia is still operating its military base in Tajikistan under the aegis of CSTO to thwart the above-mentioned threats originating from Afghanistan. It is in this context the sudden soft-corner towards Taliban by Russia is raising many questions?

It is pertinent to mention here that what are the factors that might have propelled Russia to change its stance towards Taliban? In this regard there are three major reasons that need to be underlined. These are:

a) Over the years Russia is playing a supporting role to China in the international arena. This can be evident from the growing alignment between Russia and China on several issues and in this process, Moscow is also losing its “strategic autonomy”, in the decision-making process. The dependence of Russia on China has increased significantly after the Western sanctions in the aftermath of the Crimea crisis in the post-2014 phase.

b) Russia is also losing its “strategic preponderance” in Central Asia in recent years. This is largely because of the emergence of new political elites in Central Asia (except in Tajikistan) and they are pursuing a multi-vector foreign policy as studies suggest. These new leaderships in the Central Asian landscape are quite apprehensive of China’s move in Central Asia. They think Russia is also not in a position to protect them in case of any aggression from China. Thus, Russia to regain its lost position in Central Asia may be using Taliban rule in Afghanistan as a ploy to warn Central Asian countries to fall prey to the Russian dictum.

c) Russia as part of its policy of “Greater Eurasia” is pursuing vigorous geoeconomics diplomacy. In this process, it is also interested at getting access to the new energy market. Moscow’s involvement in the construction of the Pakistan Stream Gas Pipeline and its desire to control the Afghan natural resources are few of the instances.

Some of the above reasons are propelling Russia to mend fences with the radical Taliban. However, Russia is not understanding the long-term consequences of engaging with the Taliban. This will only encourage the radicals of the North Caucasus which Russia is confronting over the years.

A question that will arise is whether Russia will continue its policy of supporting Taliban? This is in the context of growing criticism by the global community of radical Taliban and its patrons- Pakistan and China. The United Nation’s Security Council (UNSC) which met on 30 August 2021, under the chairmanship of India , “Calls for the Taliban to facilitate safe passage for people wanting to leave Afghanistan, allow humanitarians to access the country, and uphold human rights, including for women and children.” Though there was a consensus about the resolution adopted by the Council, however, Russia “abstained” from the resolution.. Similarly, China has also followed Russia’s line. This confirms that Russia is having a sympathy for Taliban in Afghanistan.

Similarly, President Vladimir Putin though in his speech at 15th BRICS Summit which took place on 9 September 2021 in virtual mode under India’s Chairmanship raised the issue of Afghanistan. Though he stated that “ we are not interested in Afghanistan remaining a threat to neighbouring countries or having terrorism” however, what is expected is a concrete plan of actions from Russia including reprimanding China and Pakistan for their nefarious role in accentuating the present crisis situation in Afghanistan . At the same time Moscow should stop support to radical Taliban.

Already resistance is mounting against Taliban from the Northern Alliance and reports suggest former Afghan National Army members are regrouping under Amarullah Saleh and Ahmad Massoud. Russia should understand that Taliban is not the legitimate voice of the Afghan people. Hopefully, Russia will rethink its Afghan strategy.

The writer teaches at the School of International Studies, Jawaharlal Nehru University, New Delhi. He can be reached at nalin238@gmail.com. Views expressed are writer’s personal

While evaluating Russia’s stand towards Taliban, it appears that Moscow does not follow a consistent policy. It is a common fact that Russia is the worst victim of terrorism over the years. A number of studies suggest that many of the Northern Caucasian militants had taken training from Taliban in the post-1995 phase. Reports suggest, along with Taliban, Pakistan is supporting some of these militants and terrorist groups that are currently operating illegally in Russia.

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Opinion

YUDHBIR SINGH DADWAL, THE HANDSOME FACE OF DELHI POLICE

Pankaj Vohra

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Yudhbir Singh Dadwal, a 1974 batch IPS officer was the 16th Police Commissioner of Delhi who served in this position for over three years. His passing away a few days ago brought back several memories, the earliest being my first meeting with him in 1980 when he was the additional DCP of New Delhi district. This was the period when Pritam Singh Bhindar was the CP and Gurcharan Singh, the DCP of the district. Dadwal was always well turned out and preferred to wear a beret instead of the usual peak cap, which most IPS officers preferred. He would invariably be present at the Boat Club which used to be the designated venue of all demonstrations and protests.

Reporters covering the crime beat would also look after the major demonstrations and thus it was very frequently that one would inter-act with this handsome police officer, whom some of us would refer as the “Boat Club Specialist’’.  Of course, SI Sharma who served at the Boat Club police post for over 23 years as well as Pandit Hari Dev, the Parliament Street ACP, would also be always present. Dadwal would crack jokes with the reporters as we waited for the demonstrators to turn up and thus his association with some of us in the media started. His other batchmates—Amod Kanth, Umesh Katna and Shujauddin Sajid— were all making a mark in the police and Dadwal too was embarking on his onward journey. His first independent district posting took him to the East District where a major riot broke out in the Chauhan Bangar area near Seelampur one night.

Unfortunately, Dadwal had to proceed on leave due to some very personal reasons and the riot was quelled by his boss, Surjeet Singh and his colleague, J.P.Singh. Thereafter, one would continue to run into Dadwal at the Police Headquarters and he would always have some interesting anecdote to narrate.

Subsequently, he joined the R&AW and was posted at Rome. Perhaps it was the nature of his job that brought about a change and he inter-acted with very people, I being one of them. When Dr K.K. Paul was about to complete his distinguished career with Delhi Police, there was speculation on who would succeed him. Kiran Bedi was the next in line in terms of seniority (1972 batch) but the Home Ministry seemed interested in someone else other than her. It was at this time, Dadwal would sometimes call up to find out what the developments were since he had emerged as the front-runner. Finally, he was selected. He was extremely helpful and When Hindustan Times, where I was working at that time, organized an AR Rehman event in Rajouri Garden, the permission was held back since clearances had not been obtained. It was Dadwal who helped in resolving the situation and provided vital inputs to get the permissions before instructing his DCP to go out of the way and allow the event. After Delhi Police, he went to the SSB and thereafter met a very few people.

I had not seen him in many years and the news of his sudden demise shocked me as it did everyone else. He would have been 70 next month. However, his friends, well-wishers, colleagues and associates would always remember him as an outstanding person and an able police officer. 

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Opinion

Modi masterstrokes: Telecom reforms and ‘bad bank’

Setting up a ‘bad bank’ and undertaking the telecom reforms are only the added dimensions to the long trajectory of structural and process-driven reforms by the Narendra Modi government, and yes, there is more to come.

Sanju Verma

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The Union Cabinet last week cleared big-bang telecom reforms that include, among other things,100% foreign investment through the automatic route. These reforms will usher the telecom industry into a new era, boost investment and reduce the debt burden and ease cash flows. The Cabinet also allowed a four-year moratorium on all dues that telecom operators have to pay to the government, including annual payments of dues arising out of the adjusted gross revenue (AGR) judgement and spectrum purchased in past auctions, excluding the March 2021 auction. The moratorium will start from October 1, 2021. These reforms are deep, broad and structural. They will bring in change today and in the future as well and are revenue-neutral for the government. Moratorium or deferment on due payments of spectrum purchased in past auctions (excluding the auction of 2021) for upto four years, with net present value (NPV) protected at the interest rate stipulated in the respective auctions is a landmark step.

Option to the telecom players to pay the interest amount arising due to the said deferment of dues by way of equity is a huge step too that will drastically bring down the unsustainable debt levels of some players. This will also help various banks having substantial exposure to the telecom sector.

The definition of AGR which had been a major reason for the stress in the sector, has been rationalised by excluding non-telecom revenue of telecom companies from the ambit of AGR, with prospective effect. AGR refers to revenues that are considered for payment of statutory dues. Telecom companies had been asking for a change in definition of AGR since 2005 and it finally happened in 2021, thanks to sweeping, bold reforms by Prime Minister Narendra Modi. A four-year moratorium to pay government dues (but with interest) is a welcome step too.

The Modi government has also allowed permission to share scarce airwaves. The scrapping of spectrum usage charge (SUC) for airwaves acquired in future spectrum auctions is again a decisive measure. And though this is with prospective effect, it will lead to massive savings for telecom players, as currently anywhere between 3-5% of AGR is paid as SUC and about 8% of AGR, as license fee. Allocation of spectrum through an auction for a period of 30 years, compared with the 20-year period prevalent at present, is another out-of-the-box move. Also, telecom operators will be allowed to surrender the spectrum that will be acquired in future auctions, after 10 years of the lock-in period. In effect, the recent telecom sector reforms by the Modi government will restore back to health a sector that was repeatedly impaired by successive Congress regimes that squeezed the sector by forcing companies to bid for auctions at ridiculously expensive prices. Thereafter, license fees, SUC, penal taxes, only made the going more difficult for telcos, making even the banks who loaned large sums of money to these telcos saddled with NPAs and bad debts under incompetent Congress dispensations. However, all that will now be a thing of the past as the recent measures will put the sector back on track.

Easing of customer acquisition norms for telecom operators by replacing the need to fill physical forms with digital forms, for instance, shows the minute detailing that went into the relief package announced for telecom players.

In effect, the structural and process reforms in the telecom sector will protect and generate employment opportunities, promote healthy competition, protect interests of consumers, infuse liquidity, encourage investment and reduce regulatory burden on telecom service providers (TSPs). In the backdrop of the outstanding performance of the telecom sector in meeting Covid-19 challenges, with huge surge in data consumption, online education, work from home, interpersonal connect through social media, virtual meetings etc., the reform measures will further boost the proliferation and penetration of broadband and telecom connectivity. The reforms reinforce Prime Minister Modi’s vision of a robust telecom sector, with emphasis on competition, customer choice, antyodaya for inclusive development, bringing the marginalised areas into the mainstream and universal broadband access to connect, the unconnected. The package is also expected to boost 4G proliferation, infuse liquidity and create an enabling environment for investment in 5G networks.

Huge reduction in bank guarantee (BG) requirements (80%) against License Fee (LF) and other similar levies, are an important step too. Henceforth there will be no requirement for multiple BGs in different licenced service areas (LSAs) regions in the country. Instead, one BG will be enough. Also, from 1st October, 2021, delayed payments of License fee (LF)/spectrum usage charge (SUC) will attract interest rate of SBI’s marginal cost of lending rate (MCLR) plus 2%, instead of MCLR plus 4%, which will give huge breathing space to telcos. Interest will be compounded annually instead of monthly, with penalty and interest on penalty removed. For auctions held henceforth, no BGs will be required to secure instalment payments, as industry has matured and the past practice of BG is no longer required. Additional SUC of 0.5% for spectrum sharing has been removed.

Ease of doing business is being promoted, with cumbersome requirement of licenses under the 1953 customs notification for wireless equipment, removed. Self-kyc (App based) has been permitted. E-kycrate has been revised to only one rupee. Shifting from prepaid to post-paid and vice-versa will not require fresh kyc. Paper customer acquisition forms (CAF) will be replaced by digital storage of data. Nearly 300-400 crore paper CAFs lying in various warehouses of TSPs, will not be required. Warehouse audit of CAF will not be required. SACFA clearance for telecom towers has been eased. DoT will accept data on a portal based on self declaration basis. Portals of other agencies (such as civil aviation) will be linked with DoT Portal.

The Modi government is also laying down the framework for incorporation of a “Bad Bank” with all the regulatory approvals in place.

The high level of provisioning by public sector banks (PSBs), of their stressed assets calls for measures to clean up the bank books. An asset reconstruction company limited (ARCL) and asset management company (AMC) is being set up to consolidate and take over the existing stressed debt and then manage and dispose the assets to alternate investment funds (AIFs) and other potential investors for eventual value realization. The incorporation of the national asset reconstruction company limited (NARCL) was registered with the registrar of companies (RoC) on 7th July, 2021. Paving the way for a major clean-up of bad loans in the banking system, the Modi government last week cleared a Rs 30,600 crore guarantee programme for securities to be issued by the newly incorporated ‘Bad Bank’ for taking over and resolving non-performing assets (NPAs) amounting to Rs 2 lakh crore.

The Reserve Bank of India is in the process of granting a licence for the National Asset Reconstruction Company Limited (NARCL), following which toxic assets worth Rs 90,000 crore that banks have already fully provided for, will move to the NARCL. The Cabinet’s decision to extend a five-year guarantee for NARCL-issued security receipts to banks completed the entire cycle of cleaning up India’s banking system, that began with the recognition of the extent of bad loans in 2015. The erstwhile Congress led UPA never fully provided for bad loans. Instead,the Congress ran the banking system like a private fiefdom by spending good money, after bad. NPAs were not fully recognised during the UPA era and banks were forced to lend money to fraudulent companies, so that they could simply repay the earlier loans availed from banks, by these companies. In effect, the erstwhile Congress regime ran a huge “ponzi scheme”, with banks being made unwilling and often, willing accomplices. Prime Minister Narendra Modi’s zero tolerance for corruption, rewrote the rules of the game in the last seven years, with banks being restored back to health.

Under the new proposed mechanism, the NARCL will acquire assets by making an offer to the lead bank. Private sector asset reconstruction (ARCs) firms may also be allowed to outbid the NARCL. Separately, public and private lenders will combine forces to set up an India Debt Resolution Company (IDRC) that will manage these assets and try to raise their value for final resolution. The Modi government has completely overhauled the banking system by tightening prudential norms and recognising bad assets. A 15% cash payment would be made to the banks based on objective valuation and the rest 84% will be given as security receipts (SRs). For those to hold on and have their value intact, there is a need for the government to give a back-stop arrangement and that is why Rs 30,600 crore has been cleared by the Modi government.

Once the NARCL and the IDRC have finally resolved the bad assets, preferably as a going concern and not through liquidation proceedings, the balance 85% held as security receipts would be given to the banks. The government back-stop of Rs 30,600 crore will come in only as much as to pay the gap between the realised value and the face value of those receipts and, this will hold good for only five years. While there are 28 ARCs in the private sector, they did not take up big ticket resolutions, so a need was felt for government-backed security receipts and the NARCL. The whole idea is to ensure that value that is locked in the assets is realised and comes back to the banks; Banks then use it as “Growth Capital” and the banking system becomes more robust. The five-year limit on the guarantee, with an increase in the fees charged for the guarantee every year, is an incentive for the resolution process to be completed at the earliest. The Modi government has addressed the issues facing the banking system in totality, that in 2015 was a major challenge for the economy. The twin balance sheet problem which caused a lot of stress has been resolved in a holistic way. The government guarantee for the proposed security receipts is a positive stepping stone for unlocking stressed assets. The upfront cash payment by the NARCL to banks will immediately be accretive for the profitability and capital of the banks. The ability of the NARCL to resolve these assets in a time-bound manner will be critical for future provision writeback by banks and that is precisely what the NARCL will look to do.

Public sector banks will have a 51% ownership in the NARCL, while their shareholding along with that of public sector financial institutions will be capped at 49% for the IDRC, with private lenders bringing in the rest of the equity capital. About 16 banks, including private players, would put up about Rs 6000 crore as equity for the NARCL. These are some pertinent lines spoken by PM Modi,at the CII conference in August 2021: “Our government is ready to take the biggest risk in the interest of the nation. GST was stuck for so many years only because those who earlier in the government could not muster up the courage to take political risks. We not only implemented GST but today we are witnessing record GST collection. Recently, we decided to scrap retrospective tax which was praised by the industry. It will strengthen the bond between the government and industry.” Well, setting up a “Bad Bank” and the telecom reforms, are only an added dimension to the long trajectory of structural and process driven reforms by the Modi government and yes, there is more to come.

The writer is an economist, national spokesperson of the BJP and the bestselling author of ‘Truth & Dare: The Modi Dynamic’. Views expressed are writer’s personal.

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WILL PM MODI’S MAGIC WORK ON BIDEN AND HARRIS TOO?

Surendra Kumar

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Irrespective of what his diehard detractors might say, PM Narendra Modi has devised his own distinct, characteristic and inimitable charm toolkit which helps him trigger positive vibes in his foreign counterparts and generate personal rapport and chemistry. What can be a more convincing than the fact that he was able to develop strong personal chemistry with two US Presidents, Barak Obama and Donald Trump, who were individuals of such contrasting personalities and different from each other like chalk and cheese. With this background, there shouldn’t be any doubt that Narendra Damodardas Modi and Josheph Robenette Biden Jr will hit off well; though there will be no raucous Rock star like reception in Madison Square Garden as happened before Modi met Obama, nor a carnival like Howdy Modi in Houston where the Indian PM literally owned the stadium and introduced the US President Donald Trump to 50,000 strong Indian Americans.

Biden and Modi have talked on phone and met virtually thrice at the QUAD summit (March 21), Climate Change Summit (April 21) and G-7 Summit in June this year. The US Defence Secretary Lloyd Austin and the Secretary of State Antony Blinken have visited India respectively in March and July this year. And keeping pressure on India to announce her Net Zero commitment by 2050, the US Presidential Envoy on Climate Change, John Kerry has visited India in April and September. During his last visit, Kerry launched the Climate Action and Finance Mobilization (CAFM) with India which will focus on: finance mobilization, clean energy and climate adaptation measures.

The US defence exports to India remain on a high .Both have signed three foundation Communication agreements: LEMOA, COMCASA, and BECCA. India has been accorded the major defence partner status bringing her on par with USA’s NATO allies and given SAT-1 status that will facilitate transfer of sensitive American technologies for civilian and defence use. Obviously, India and USA have overcome the hesitation of history and come closer than ever militarily.

There has been extensive sharing of information and satellite images and intelligence inputs to fight international terrorism, cybercrimes and money laundering.

In spite of disruptions caused Covid-19, in 2019-2020 bilateral trade between India & the US was estimated at US$88.75 billion; India’s trade surplus with the US in 2020-21 was US$ 23 billion. The US has replaced Saudi Arabia as the second largest supplier of oil. Nonetheless, the Trade and Industry Minister Piyush Goel was quoted to have said recently that a trade agreement with the US wasn’t likely in near future, not even a mini trade deal. The US, focused on addressing its trade issues with China, isn’t interested in signing any trade agreement. The US is believed to be demanding market access for its agri products, a sensitive area for India, and substantial amendments to IPR and laws related to data protection. On its part, India also seeks market access for its automobile parts, engineering and agro product and a relook at the GSP which stands withdrawn, and the long pending demand for a toatalisation agreement. H1B visas issue and certain regulations have impacted Indian tech companies adversely.

After some initial hiccup, the US extended assistance to India on a mission mode in the face of devastation caused by the second wave of Covid-19 pandemic. The total US Covid-19 related assistance including contributions from the Indian Americans was worth over US$ 500 million.

Both the Trump and Biden administration have been supportive of India on the issue of Chinese aggression across the LAC. As a matter of fact, increasing Chinese assertiveness and aggressiveness brings India-US nearer though our threat perception of China, which remains in occupation of Indian territory and with which we have an unresolved boundary dispute aren’t identical.

It’s largely the China factor which has led the US to acknowledge India’s salience in the QUAD and Indo-Pacific. It was Donald Trump who introduced a virtual blood transfusion in the QUAD which was lying in limbo since 2007 and redefined its role. He also rechristened the Asian–Pacific into Indo-Pacific underlining India’s relevance. Leaders of QUAD, at their summits, have been stressing that they stand for a free, open and inclusive Indo-Pacific with freedom of navigation and over flights and peaceful resolution of territorial disputes as per the International laws including the UNCLOS. This will be reiterated at the forthcoming QUAD summit as well. Modi might emphasize his concept of SAGAR: Security and Growth for all in the Region.

Notwithstanding the claims of the concerned States to the contrary, China considers both the QUAD and Indo Pacific as primarily anti-China groupings. Interestingly, Russia shares this perception.

To dilute this perceived anti-China slant, at the virtual summit of QUAD in March 21, the leaders identified new areas of cooperation: new technologies, developing alternative supply chains and getting 2 billion doses of Covid-19 vaccine produced mostly in India with financial and logistic support from Japan and Australia. Fighting terrorism, cybercrime, and cooperation in maritime piracy are also likely to be discussed at the forthcoming QUAD summit that might be organized on a hybrid format—that is Biden and Modi attending in person while the Japanese and Australian PMs joining virtually.

The announcement of the formation of a trilateral Security partnership between the US, the UK and Australia (AUKUS) ostensibly to confront China and USA’s decision to help Australia develop nuclear Powered submarines has not only enraged China and provoked France to recall it’s ambassadors from Washington and Canberra but also cast a spell on the future of QUAD.

On the first visit to US in Sept 2014,PM Modi publicly advised Obama in his speech at the Council of Foreign Affairs not to withdraw from Afghanistan in hurry. The same sage advice was conveyed to Trump. India went on repeating that there is nothing called good Taliban or bad Taliban, they are the same and essentially bad. But the war weary US, desperate to get out, assiduously courted the Taliban with Pakistani and Qatari help and signed an agreement in Doha in March 21 which was a total surrender to Taliban. American withdrawal was humiliating; it left Afghan people, especially women at the mercy of an undemocratic regime. Regrettably, the US showed utter disregard to possible spike in security challenges of India posed by the Taliban Government comprising of 14 internationally wanted terrorists.

With Vice President Kamla Harris and Democrat Congresswoman Pramila Jayapal in the background, Joe Biden might flag reports of increase in alleged violations of freedom of expression and religious tolerance in India. His soaring speech in the UN might cover fight against the unprecedented pandemic, Climate change, international terrorism, and underline the need of strengthening the UN, WTO, and WHO and might allude to the negative role being played by some countries like China and Pakistan.

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PM Modi’s dynamic leadership and the global re-ordering

In the global re-ordering that is now in the offing and in the unmistakable shift eastward, the compass also points India-ward. As PM Modi embarks on his US tour, the first since the re-ordering began, these dimensions are emerging with certainty.

Anirban Ganguly

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As Prime Minister Modi embarks on his UN and US visit, it is interesting to see how he has pushed the Indian narrative of crisis management and handling over the last two years. Modi’s politics is not the politics of resentment, he does not speak of the rise of India as being propelled by the narrative of humiliation. When he speaks of India’s rise, he speaks of a benevolent rise, a rise with responsibility. Since March 2020, amidst many a dire prediction of India reaching the nadir in her struggle with the pandemic, Modi’s politics of aspiration, of India’s benevolent rise has triumphed. This has been attracting global recognition.

Public intellectual, S. Gurumurthy has argued that now, ‘India’s stature has altered to its advantage and the global structure and its perception about India too have changed…The investment India has made in its democratic institutions and rule of law is now both a matter of global attention and attraction.’ This rule of law, under Modi, has not been a coercive right denying approach, it has based itself on a sense of duty rather than being only a clamour for rights.

It is interesting to note, that much before some of the leading global minds discussed the effects of the pandemic and its impact on a global re-ordering Modi had already articulated India’s position. At a time when the pandemic had hit, when confusion prevailed globally on how to handle it and when the narrative of isolationism and disconnectedness hit the stands India’s position was perhaps the most nuanced and farseeing. Prime Minister Modi had said, that the pandemic ‘does not see race, religion, colour, caste, creed, language or border before striking’ and that ‘our response and conduct thereafter should attach primacy to unity and brotherhood. We are in this together.’ Modi argued that ‘unlike previous moments in history, when countries or societies faced off against each other, today we are together facing a common challenge. The future will be about togetherness and resilience.’ It is instructive to understand this against the canvas of the ongoing global discourse on re-ordering.

PM Modi’s emphasis on the need to put human beings at the centre of the vision for global prosperity, his insistence that there should be a free and ‘open sharing of the benefits of medical research and development, of the need to develop adaptive, responsive and humane health care systems, evolve new crisis management protocols and procedures for an interconnected global village’ and the need for reforming intergovernmental organisations like WHO, was the first such a clear articulation of the future re-ordering, the world after the pandemic-inflexion point. It was also becoming clear that the East had performed better in terms of handling the pandemic and addressing the multi-dimensional complexities arising from it. After this stand was articulated, one saw thinkers like Henry Kissinger and Joseph Nye take a similar line. While Nye spoke of the need for the United States to ‘launch a massive COVID-19 aid program— a medical version of the Marshall Plan, Kissinger argued that leaders must choose a path of cooperation that ‘leads towards international resilience’ against such global crises in the present and in the future. Nye also spoke of the need for leaders to articulate ‘the importance of power with rather than over others and set up bilateral and multilateral frameworks to enhance cooperation. In Nye’s framework a ‘cooperative and soft-power enhancing policies’ could create a ‘geopolitical path to a better world.’ India’s insistence, since the early days of the pandemic, had already been this— the need for a cooperative, soft-power enhancing, multilateral, synergized and resilient framework.

Modi has also been repeatedly speaking of the Asian century. One had heard of the rise of the East, or narrative of the Asian century, in the past, when vast tracts of Asia were under colonial subjection, material exploitation and cultural subjugation. PM Modi’s reference to the 21st century being the Asian century, in the present context, needs to be read against the backdrop of Asia on the verge of a major shift eastward post pandemic.

Francis Fukuyama, for instance, has spoken of the continuing shift of the ‘global distribution of power’ eastward, since ‘East Asia had done better at managing the situation than Europe and Asia.’ Diplomat scholar Kishore Mahbubani, for instance, argued that the ‘deference to Western societies, which was the norm in the 19th and 20th centuries’ will be replaced by ‘a growing respect and admiration for East Asian ones.’ As Gurumurthy too has argued, ‘Covid 19 has exposed the hollowness of assumptions of the world order based on Western experiences which were experimented on the Rest from 1990s.’ Singapore Prime Minister Lee Hseing Loon has also joined PM Modi in speaking of an ‘Asian century.’ The pandemic, Mahbubani, argues, could ‘mark the start of the Asian century.’ In a post Covid order, Asia will be looked upon as a role model, he observes, ‘not only for how to handle a pandemic but how to govern more generally.’

That governance was carried on with and not just managed, despite gargantuan pressures of a once-in-a-century pandemic, was best seen in an India under its onslaught. Economic recovery, mega infrastructural push, the ushering in of a futuristic and transformative national education policy, the time-bound development of a vaccine and the humongous effort to administer it to a massive and varied population, the handling of the oxygen supply dimension, among other things, perfectly demonstrated Asian resilience and one-pointedness in times of acute crisis. Ultimately the examples that will define and represent the Asian century will be examples that have been successful and transformative in an inherently and unshakably democratic environment, driven by synergy, national cohesion and inspiration, brought forth by the sense of collective duty and shorn of any hectoring and coerciveness. In all of these India is bound to stand out. Among the eastern countries, India’s handling of pandemic, in a most varied and complex setting, her reaching out to countries across the region and developing a web of cooperation, is another dimension that stands out.

American journalist and author, James Traub, for instance, argued that Asian democracies show that ‘citizens can surrender some’ of their ‘freedom without sacrificing fundamental political rights.’ In India’s handling of the pandemic, freedom remained intact, and the sense of civic responsibility and commitment grew, while fundamental political rights remained undiluted and protected. Those who have peddled the ‘dictator’ Modi narrative, directly or indirectly, or had thought that the pandemic would offer an ‘ideal’ opportunity to prove their thesis right, were disappointed. In their unrelenting opposition to Modi, they failed to spot the actual dictators, the failing democracies and the faltering republics.

In the global re-ordering that is now in the offing and in the unmistakable shift eastward, the compass also points India-ward. As PM Modi embarks on his US tour, the first since the re-ordering began, these dimensions are emerging with certainty.

Anirban Ganguly is director, Dr Syama Prasad Mookerjee Research Foundation, New Delhi. The views expressed are personal.

PM Modi has also been repeatedly speaking of the Asian century. One had heard of the rise of the East, or narrative of the Asian century, in the past, when vast tracts of Asia were under colonial subjection, material exploitation and cultural subjugation. PM Modi’s reference to the 21st century being the Asian century, in the present context, needs to be read against the backdrop of Asia on the verge of a major shift eastward post pandemic.

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