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The Rediff Business Special/ N Vittal

'Indigenous software and hardware more helpful than foreign junk'

Part I

Part II

I believe that, as the CVC, you must make it mandatory for vital institutions such as banks to adopt indigenously developed and tested software. Without such strong and coercive administrative action, our Indian institutions will have a tendency to succumb to fancy marketing brochures and put in place a network, and communication tools, that are easily compromised.

I have requested Dr Vidyasagar that we should develop the appropriate software within three months. Recently the Maratta Chamber of Commerce and Industry held a seminar in Pune specially related to the frauds relating to cheques and drafts. A lot of technical people participated in that seminar. They pointed out that already appropriate encryption software was available. Therefore availability of encryption software cannot be an excuse for not introducing computerisation.

Another problem is the issue of connectivity. Fortunately, the Reserve Bank of India has already taken the initiative and set up the hub in Hyderabad and has ordered 438 very small aperture terminals. I was fortunate in that I could persuade Dr Kasturirangan, secretary, department of space, to make available half transponder, which was needed by the RBI.

The RBI has also brought out another important area where frauds take place, namely, the listed companies' cash transactions especially relating to dividend etc. Now the rules are that all listed companies should do their payment transactions using the electronic system. This is another method of using technology to cheek the possibility of fraud.

At the same time, I am acutely conscious of the fact that while use of IT may be helpful to some extent in checking the frauds in the manual system, use of IT itself will bring in a new set of computer frauds. We have also to move urgently to get the cyber laws enacted so that use of computerisation is not delayed for want of appropriate legal cover.

Yet another aspect of computerisation is the availability of computer literate manpower. We have indicated that the percentage of direct recruitment at the entry as well as senior levels which has been agreed to between the banks and the unions can be utilised to induct computer literate staff.

Thus apart from training the existing staff, there will be adequate technically skilled manpower available with the banks to operate the computer systems smoothly.

One of the most important questions in handling the issue of corruption in the banks is whether we are able to punish the corrupt in banks effectively and simultaneously encourage honest people. An oft-repeated complaint in banking system is that because of the CBI, there is a fear complex at the cutting edge level. Honest bank officers find that their career can be ruined by one or two procedural mistakes, which may lead to a CBI raid, and all the attendant negative consequences.

In order to tackle this problem, a new chapter on banks has been introduced in the Vigilance Manual from January 1, 1999. The chapter takes into account the need for giving suitable assurance to the honest bankers. One of the features of the chapter is that while in the case of direct frauds in deposit accounts, the CBI will directly go ahead with investigation.

In prosecution in cases of decisions relating to loans and advances, the CBI will consult the central advisory boards for junior officers. The present advisory board constituted by the RBI will become part of the infrastructure of the CBI. So far as the bank specific boards are concerned, they will be constituted as early as possible and will consist of a retired district judge, retired DIG and a retired banker of the level of general manager.

The advisory boards are expected to give their comments within a month and if they do not give their decision, the CBI will be free to take further action. In order to expedite the departmental proceedings, the CBI at the time of seizing documents will make authenticated photocopies available within four days. The authentication means the charged officer will also sign them. Many a time it is the charged officer who indirectly contributes to the delay by continuously asking for adjournments or examination of more and more documents.

Complaints are made many a time that political pressure or outside pressure is brought in loan cases. In such cases, I have already told the bankers that they can directly complain to me and I would write a formal letter to them saying that the decision must be taken on merits. I will also send a similar communication to the secretary, department of banking. This will at least remove the excuse today given that because of political pressure or outside pressure, wrong decisions are taken.

The juniors sometimes complained that the seniors are corrupt and they are protecting the corrupt and they are forced to do corrupt things. In such cases, I have already issued an order that if the juniors initiate case, which will result in a vigilance case, they can send a copy directly to me.

Tackling frauds in other financial sectors

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