Universal bank account: It?s time to reimagine beyond digital banking

All pathbreaking moves in history have taught us that transformational changes do not occur when we just try to optimise existing facilities. They occur only when we transcend to a level where we create customer value in completely new ways ? when we reimagine things in entirety.In the 1990s, we witnessed a technology and regulatory intervention-powered transformation in the Indian capital markets, when the electronic stock exchanges, electronic stock depositories and electronic payment system completely overtook the physical stock trading system, manual stock keeping and paper-based settlements. This reimagined, paperless and seamless trading architecture ensured immense transparency, reach and exponential growth in trading volumes. Consequently, today, our capital markets are one of the largest in the world in terms of volume.We have also very successfully done this in the telecom sector ? a completely new mobility-based system not just moved people away from fixed line, but indeed made fixed lines redundant.Banking, with its brick-and-mortar format, which once was in many ways an intimidating experience, is today on our fingertips. Computerisation and use of advanced technology found its roots in Indian banking with the advent of new private sector lenders. The concept of payments banks gave further impetus to digital banking.It is now time to think beyond digital banking and digital banks. The time is ripe for India to take a lead and catapult banking to a completely different level. The very successful experiment on the securities infrastructure makes us believe that banking of the future can also be a completely frictionless and delightful experience through a centralised technology architecture, new regulatory framework and ground-up reimagination. With the right thought leadership and regulatory support, a completely electronic banking experience of any bank, anywhere and anytime is not out of reach.This concept can be developed based on the following three pillars:?Central banking depository (CBD): A customer could approach the CBD to open a ?universal bank account? and would be assigned a virtual banking account number. This will be one and only one bank account number that the customer needs for any transaction with any bank. The customer could then open an account/transact with any bank of her choice. CBD would keep records of all banking transactions of an account holder, eliminating the need for multiple account keeping at multiple banks.This would provide inter-operability where customers can change banks while retaining the same account number. This is like the current stock data keeping by the depositories. Technologies like blockchain could be explored to achieve this. Banks will benefit from reduced data entry, as the same can be retrieved from the CBD. This will also bring in transparency in disclosure of records.?A common central KYC institution: It will not just be a repository of KYC data submitted by banks but will be authorised to carry out various levels of KYC checks on an account holder. This would ensure a seamless on-boarding of the account-holders for banking services, and easy switch from one bank to the other. With a KYC certificate and a CBD number, one could walk into any bank to open an account/transact. Periodic review of KYC can also be done by the designated central agency.While ensuring a uniform KYC process by an expert organisation, this will also avoid multiplicity of KYC across different banks and for other similar requirements such as for capital market transactions, property transactions, income tax, GST, shops and establishment and many others. Multiple levels of KYCs could be envisaged as per the business requirements ? from a very basic one to facilitate a limited bank account to a very detailed one to ensure compliances for more complex transactions/ business relationships. It may even be worth entrusting UIDAI with this initiative.?Shared infrastructure: In line with the growing trend of shared infrastructure to bring down costs and improve efficient utilisation, various banking channels can also be shared. A shared white-labelled ATM and business correspondent network already enable customers to make cash deposits/ withdrawals and AePS payments through an outsourced network.A white-labelled branch network could carry out banking services and retail operations of various banks in a non-discriminatory manner ? quite like the VFS application centers which provide visa application services for multiple countries under the same roof. These could also provide last mile reach to digital banks.Sharing of telecom towers by various telecom operators for creating efficiency is a good precedence of this concept. Further, a banking settlement agency/ clearing agency could do interbank settlements of fund positions based on transactions in the ?Universal Bank Account?. The rating agencies could also access the transaction flows in individual accounts to strengthen their assessment of individuals.Banks could then focus on enhancing their product suites and enriching their digital platforms for servicing of banking transactions like fund transfer, lending, payments, and wealth management.This concept ? a completely paperless, painless, and transparent model ? will not only significantly bring down the cost of banking transactions but also remodel banking like the mobile or capital market experience.Of course, it will require significant think through of the entire concept, process, and the technology architecture around this. A buy-in of the regulators to make available the requisite regulatory framework, would be a starting point. We need not look west or east for a similar model to follow ? if we did that, we would not have had Aadhar or UPI today!Any bank, anywhere and anytime would indeed require a lot of ground-up creative model development.

EPFO sees 8.45 lakh new enrolments in July

NEW DELHI: Net new enrolments with retirement fund body EPFO rose to 8.45 lakh in July from 4.82 lakh in June 2020, according to its latest payroll data, providing a perspective on employment in the formal sector amid the COVID-19 crisis.Provisional payroll data released by the EPFO last month had shown that net new enrolments stood at 6.55 lakh in June this year. The figure has now been revised down to 4,82,352.The net enrolments with the Employees' Provident Fund Organisation (EPFO) had dropped to 5.72 lakh in March 2020 from 10.21 lakh in February, according to the payroll data released in May.Latest data released on Sunday showed that net new enrolments in April were in the negative zone at (-) 61,807 against the figure of 20,164 released in August. This means that the number of members who exited the EPFO subscription was more than the number of people who joined or rejoined the scheme.Earlier in July, provisional data had showed net new enrolments for the month April at 1 lakh which were revised down to 20,164 in August.The net new enrolments with the EPFO hover around 7 lakh every month on an average.During 2019-20, the number of net new subscribers rose to 78.58 lakh as compared to 61.12 lakh in the preceding fiscal, according to the payroll data released on Sunday.The EPFO has been releasing the payroll data of new subscribers since April 2018, covering the period starting from September 2017.The data also showed that during September 2017-July 2020, the number of net new subscribers was over 1.68 crore.The EPFO said the payroll data is provisional as updation of employees' records is a continuous process and gets updated in subsequent months."The government announced lockdown on March 24, 2020. Accordingly ECR (PF returns) filing date for March month was extended to May 15, 2020," the EPFO had said in May while releasing the data.In June, it had said, "The due date for submission of ECRs for April 2020 has been extended in view of the lockdown."The estimates are net of the new members enrolled, members exited and rejoined during the month, as per records of the EPFO.The estimates may include temporary employees whose contributions may not be continuous for the entire year, it has said.The EPFO manages social security funds of workers in the organised/ semi-organised sector in India. It has more than 6 crore active members (with at least one month contribution during the year).

Coal India output may fall below 600 MT in FY21 on sluggish demand: Analysts

Analysts of brokerage firm Motilal Oswal projected production of 582 million tonne for Coal India and off-take of 565 million tonnes in FY2021 while ICICI Securities had estimated an output of 580 million tonne and sales of 550 million tonne this year.

View: Five winners of the post-pandemic global economy, and a dark horse

The pandemic is accelerating a broad turn inward that began after the global financial crisis of 2008. Globalisation had already given way to de-globalisation, with cross border flows of goods and money in decline before the pandemic hit.

Direct tax resolution: Govt garners Rs 9,538 cr

New Delhi: The government has collected Rs 9,538 crore revenue from the Direct Tax Vivad Se Vishwas scheme, Parliament was informed on Sunday.Minister of State for Finance Anurag Singh Thakur said as many as 35,074 declarations have been filed under the Direct Tax Vivad Se Vishwas scheme till September 8, 2020."The revenue generated till date through the (Direct Tax Vivad Se Vishwas) Act is Rs 9,538 crore. This figure does not include the payments made by the taxpayers who are yet to file their declarations under the scheme," Thakur said in a written reply in the Rajya Sabha.Finance Minister Nirmala Sitharaman had proposed the direct tax dispute resolution scheme, which provides opportunity to taxpayers to pay outstanding taxes and get waiver of interest and penalty, in her Union Budget speech on February 1.In March, Parliament passed the Direct Tax Vivad Se Vishwas Act. The dispute resolution scheme is valid till December 31, 2020.Under the scheme, taxpayers willing to settle disputes shall be allowed a complete waiver of interest and penalty if they pay the entire amount of tax in dispute by December 31, 2020.As many as 4.83 lakh direct tax cases involving Rs 9.32 lakh crore in disputed taxes are locked in various appellate forums. The amount is equivalent to 82 per cent of the government's direct tax revenue in FY2018-19.

Govt set to amend FCRA; Aadhar to be mandatory

New Delhi: A Bill to amend the Foreign Contribution (Regulation) Act, 2010, proposes to include ?public servants? and ?corporations owned or controlled by the government? among the list of entities who are not eligible to receive funds from abroad. The Aadhaar numbers of the office-bearers of NGOs will be mandatory for registration.The draft bill states that not more than 20% of the total foreign funds received could be spent on administrative expenses. Presently, the limit is 50%. The Bill, namely, the Foreign Contribution Regulation (Amendment) 2020, was introduced in the Lok Sabha on Sunday. The government described the move as a step to ensure compliance, enhance transparency and accountability in the receipt and utilisation of foreign contribution worth thousands of crores of rupees every year.The bill, if passed, will empower the government to ask a violator to not use the funds by holding a ?summary inquiry?. Earlier, it was done only after the person or association has been ?found guilty? of violation of the Act. Amendment of Section 17 of the Act has sought to provide that every person who has been granted certificate or prior permission under Section 12 shall receive foreign contribution only in an account designated as ??FCRA Account?? which shall be opened in such branch of the SBI at New Delhi, as the Central Government may, by notification, specify. It has, however, allowed the organisation to transfer these funds to another account for utilisation.According to the home ministry, the annual inflow of foreign contribution has almost doubled between 2010 and 2019. ?But many recipients of foreign contributions have not utilised the same for the purpose for which they were registered or granted prior permission under the said Act. Many of them were found wanting in ensuring basic statutory compliances such as submission of annual returns and maintenance of proper accounts. This has led to a situation where the Central government had to cancel certificates of registration of more than 19,000 recipient organisations, including non-governmental organisations, during the period between 2011 and 2019,? the proposed Bill says.The home ministry had flagged alleged misuse of foreign donation by several prominent NGOs including Greenpeace, Amnesty International, Teesta Setalvad?s NGO, Citizen for Justice and Peace (CJP), Compassion International, Lawyers Collective, among others. While proposing the amendments, union home minister Amit Shah, in the statement and objects, stated that this will facilitate ?genuine? non-Governmental organisations or associations who are working for the welfare of society.Last year, the home ministry had brought rules to discourage NGOs involved in conversion and had said that each functionary and member of NGOs will have to file an affidavit declaring that the individual has not been involved in any act of religious conversion or prosecuted for communal disharmony.The 2020 amendments cleared by the Union cabinet states ?amendment of clause (c) of sub-section (1) of section 3 to include ?public servant? within its ambit, to provide that no foreign contribution shall be accepted by any public servant.?Earlier, the Act restricted politicians, political parties, members of the legislature, journalists, printers or publishers of a registered newspaper, government servants or employees of any corporation or any other body controlled or owned by the government, from receiving foreign donations.

21 states accept Rs 97,000 cr borrowing proposal to meet GST shortfall

GST Council with full presence of states and UTs needs, as per the GST Act, only 20 states to pass any resolution, in case voting is required on any issue, the sources added.

Ahead of Market: 12 things that will decide stock action on Monday

Chandan Taparia of MOFSL said the index has to respect the immediate support at 11,450 level to witness an upmove towards the 11,600-11,650 zone, while on the downside, the next major support exists in the 11,350-11,333 zone.

GDP may fall more than 4% in FY21: Survey

India’s GDP will fall more than 4 per cent in FY 2020-21 feel over 35 per cent of respondents in a Business Confidence Index (BCI) survey by the Conf

New Social Security Code introduces different ceilings for different workers

The standing committee on labour had recommended gratuity eligibility criteria to be reduced between one and three years since duration of jobs have reduced in general and more and more contract workers are hired.

Indian market 'attractive' proposition for FPIs; net investment at Rs 3,944 cr in Sep so far

Overseas investors bought equities worth a net Rs 1,766 crore and put in Rs 2,178 crore in the debt segment between September 1 and 18, depositories data showed.

Stagflation worries haunt India: What is it & how it really hurts?

The impact would be far greater when rising inflation is accompanied with a stagnant output. In such a scenario, the economy would be facing the situation of ?stagflation?.