Security and operational controls in SWIFT environment

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Security and operational controls in SWIFT environment 

Reserve Bank of India (RBI) has apprised that it had issued two circulars to banks, related to security and operational controls in SWIFT (Society for Worldwide Interbank Financial Telecommunication) environment, in the months of August and November 2016. As per RBI inputs, compliance with RBI’s instructions is the bank’s responsibility and the Compliance Officer in the bank monitors the same. Further, RBI monitors compliance to its instructions on an ongoing basis and during RBI inspections and, where necessary, enforcement action is also initiated.

RBI has issued instructions mandating banks to implement, within stipulated deadlines, prescribed measures for strengthening the SWIFT operating environment in banks. Further, it has constituted an Expert Committee to look into, inter alia, factors leading to increasing incidence of frauds in banks and the measures (including information technology interventions) needed to curb and prevent it, and the role and effectiveness of various types of audits conducted in banks in mitigating the incidence of such frauds.

Government has issued an advisory to Public Sector Banks to take immediate action as per extant legal/regulatory framework to ensure that fraudulent activity is not prevalent in the bank. They have also been asked to ensure that robust systems and procedures are in place for confirming due approvals, necessary applications/documents and entry in the bank’s system in respect of all Letters of Undertakings/Comfort and SWIFT messages, and ensuring scrutiny and reconciliation of Nostro accounts, and to take all necessary steps to safeguard against occurrence of such frauds. Government has further advised nationalised banks to collectively prepare a report for effective management of operational risks, including technology risk, so as to safeguard against occurrence of frauds. Government has also asked nationalised banks to examine all accounts exceeding Rs. 50 crore, if classified as Non-Performing Asset (NPA), from the angle of possible fraud.

RBI has taken a number of measures to prevent and control frauds. These include the following:

a framework for dealing with loan frauds of Rs. 50 crore and above, under which banks classify potential fraud accounts as red-flagged accounts based on observation/evaluation of early warning signals, and take time bound action;
an online searchable database of frauds reported by banks, in the form of Central Fraud Registry, as a tool of timely identification, control and mitigation of fraud risk and for carrying out due diligence during credit sanction process;
issuance of caution advices by RBI, detailing names of fraudsters and their modus operandi;
re-verification of title deeds in respect of all credit exposures of Rs. 5 crore and above by banks, as mandated by RBI;
issuance of various master circulars to banks, with a view to restricting imprudent practices and at the same time ensuring sound procedures for conduct of business;
requiring banks to put in place adequate audit and compliance mechanisms with Board-level reporting through the Audit Committee of the Board; and
subjecting the systems and procedures in banks to supervisory review by RBI as part of the Risk Based Supervisory framework for banks.

This was stated by Shri Shiv Pratap Shukla, Minister of State for Finance in written reply to a question in Rajya Sabha today.


Input Tax Refund to Exporters 

            Government has decided to speed up input tax refund to exporters. As per rule 91 of CGST Rules, 2017, ninety per cent of the refund amount claimed shall be granted on a provisional basis within a period not exceeding seven days from the date of acknowledgement of the refund claim. Further, as per section 54(7) of the CGST Act, 2017, the final order for granting refund shall be issued within sixty days from the date of receipt of the complete application. Out of total taxpayers under GST, 64% were also registered under previous tax regime. No specific study has been undertaken on the impact of GST transition

            64% of the total taxpayers registered under GST have transitioned from the previous tax regime to GST as on 2nd March, 2018.

            The processing of refund claim is being done after the claimant has filed the GST return and the grant of the refund shall be within sixty days from the date of receipt of the complete application.

Division of assesses under GSTN

           The division of assesses between Centre and State is decided by the Centre and State Governments. GSTN got an application developed using which Central and State tax authorities have uploaded the data on allocation of migrated taxpayers in the GST System database. As on 8th March, 2018 data on division of 60,89,534 migrated taxpayers has been entered into GST System.

In order to ensure single interface for assesses under GST, the State Level Committees comprising of Chief Commissioner/ Commissioner of Central Tax and Commissioner of State tax have assigned the taxpayers to be under either the Central Tax or State Tax administration based on the turnover of the assesses on a proportionate basis. The assesses having turnover above Rs. 1.5 crores are to be assigned in the ratio of 50:50 between the Centre and the respective State while those having turnover less than Rs. 1.5 Crores have to be assigned in the ratio of 10:90 between the Centre and the respective State.

No choice has been given to assesses to opt for a particular tax administration i.e. Centre and State.


Loans provided under Stand-Up India Scheme 

Guidelines on the Stand Up India Scheme (SUPI) have been issued by Government to banks. These, inter alia, include collateral free loans through credit guarantee scheme, convergence with state and central government schemes wherever feasible, simplified application form, online application through portal, handholding support, designated nodal officer for SUPI, etc. Banks extends SUPI loan to commercially viable proposals as per Bank’s Board approved policy in this regard.

The number of loans given by Public Sector, Private and Regional Banks under the Stand-up India Scheme are 51,888, 2,445, and 1,009 respectively upto 07.03.2018 since inception of the Scheme.

Regional Rural Banks have sanctioned180 loans to borrowers of Scheduled Castes (SC) category as on 07.03.2018 since inception of the Scheme.


First Regional Conference on Mass Rapid Transport Systems for Urban Areas – Opportunities and Challenges starts in Kolkata 

The Managing Director, Delhi Metro Rail Corporation (DMRC) Shri Mangu Singh said that there is a need for expansion of metro transportation in tier-II cities. He said that it is not necessary that every city has a metro system, rather it should be based on the requirements of each city. In this regard, he mentioned that they have recommended alternative transport mode for Dehradun, capital of Uttarakhand. Shir Singh was delivering the inaugural address at the first regional conference on ‘Mass Rapid Transport System (MRTS) for Urban Areas – Opportunities and Challenges’ in Kolkata today.

 Shri Rakesh Ranjan, Advisor, NITI Aayog stated, MRTS which is beyond metro rail, has a critical role in regional connectivity. However, issues of under-investment in MRTS needs to be addressed, he said. He also spoke in length on the  financial viability of metro railway system in the light of investment requirement in urban transport system which amounts to Rs 100 thousand crores. In his address, Mr. Soon-sik Lee stated, AIIB is enhancing the quantum of loan to India from existing US $ 1.7 billion to 2 billion. India is a founding member of AIIB.

Dr. Kumar V. Pratap, Joint Secretary (Infrastructure, Policy & Finance), Ministry of Finance stated, MRTS is necessary for its efficiency and environmental benefits because it causes less pollution and less congestion thus providing more efficient and cost-effective services, which is in tune with the mantra of the Government. With MRTS, more people per unit of energy can be transferred as compared to personalized transport, he said. Hence, MRTS is economically more viable in comparison to other modes of transport. Shri Mukund Kumar Sinha, Joint Secretary, Urban Transport, Ministry of Housing and Urban Affairs, stated, investment requirement for MRTS is to be around 4 billion US dollars in the next five years.

 Shri Mangu Singh, Managing Director, Delhi Metro Rail Corporation Limited, further opined that a good transport system is necessary for social, economic and cultural growth of India, provided with matching resource and developmental facilities to keep technology updated. He further pointed out that a sustainable urban transport system too, is the need of the hour in the present green field scenario of India. Urbanisation is the natural centre for growth. Investment in the MRTS will decrease pollution and accidental rates. He further stated, DMRC is growing in its role as a nurturing hub for other metro rail aspiring cities. DMRC with enhanced emphasis  on renewable energy, is providing consultancy to Bangladesh and  Indonesia  for their respective metro rail projects.

Shri Parashuram Singh, Managing Director, Kolkata Metro Rail Corporation, mentioned the impediments lying in the extension of Metro Rail in Kolkata, including the reality that Metro Rail has to take into account the heritage buildings lying in alignment with it as well as the burden of removing 1000 hutments lying along its alignment.

 The other dignitaries who spoke on the occasion included Shri Kumar Keshav, Managing Director, Lucknow Metro Rail Corporation Ltd., Miss Deepa Kotnis, Executive Director, Bangalore Metro Rail Corporation Ltd. and Prof. Sanjay Gupta, School of Planning and Architecture, Delhi among others.

 The conference was jointly organized by Ministry of Finance, AIIB, ASSOCHAM and Research and Information System for Developing Countries (RIS). Before the third annual meeting of Asian Infrastructure Investment Bank (AIIB) to be held in Mumbai from June 22 to 27 this year, eight such regional conferences will be held on the issues relating to infrastructures development, sustainable infrastructure, mass rapid transportation  system, port and coastal infrastructure, urban development and the like in eight different cities of India.

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