Mis-selling: from impressions to evidence

by Renuka Sane.



Retail finance in India is once again in the news for reasons of fraud, this time in the form of the Saradha Group in West Bengal. There is a general sense that such schemes proliferate because of the failure of financial inclusion, and that better supervision by current regulators will bring us back on track. The problems of mis-selling however, are not confined to the unregulated chit-fund industry. For many years now, problems of consumer protection have been gathering prominence. While there is concern about the collision between hard-driving financial firms and the average unsophisticated investor, it has been over-ridden with the argument that the problems are minor, sporadic and over-stated by a sensationalist media.

Evidence on mis-selling

There may not be consensus in policy circles on the pervasiveness of mis-selling, but the incipient academic literature on the problems of consumer protection in household financial choice in India reflects otherwise. The following papers are of note:

• Anagol and Kim (2010) study a 22 month period in which closed-end mutual funds were allowed to charge an arguably shrouded amortized fee whereas open-end funds were forced to charge standard entry loads. They find that inflows into the more expensive funds were much higher, and that investors paid approximately 500 million dollars in extra fees in this period.
  
  


• Sane and Thomas (2013) discuss the failure of consumer protection in the micro-finance crisis in Andhra Pradesh in 2010.
  
  


• Anagol, Cole and Sarkar (2013) conduct audit studies of insurance agents. They find that insurance agents overwhelmingly recommend products which provide high commissions to the agent and are unsuitable for the customers. This is exacerbated for customers who appear to be less financially literate.
  
  


• Halan, Sane and Thomas (2013) study the lapsation in insurance policies after the introduction of unit-linked insurance plans (ULIPs) and find that investors lost more than a trillion rupees from mis-selling over the 2005-2012 period. This shows us that while chit funds are a problem in India, (regulated) ULIPs have imposed bigger losses upon households than (unregulated) chit funds.

These papers offer hard evidence about the problems of consumer protection across products and income-groups and establish that the magnitudes of money involved are substantial. It is not easy to now argue that the problems are sporadic and small and of second-order importance.

Weak regulation

These problems have not taken place in an environment of unregulated finance. The regulation in India is product oriented, focuses on form and not function, and places great emphasis on prudential regulation. While protection of customer interests is a key part of the mandate of all regulators, there is no framework on how to bring this about. Each regulator has its own procedures for licensing and registration of intermediaries, expected code of conduct, caps on commissions, grievance redress procedures. The focus is on inputs, and checking the correct boxes, and not on outcomes. This often leads to instances of regulatory arbitrage, or leaves open the possibility that several entities slip through the cracks and get regulated by no one regulator. The system does not clearly identify the rights of the customer, or place responsibility of outcomes on the distributor. There is no basic definition of whether a product is suitable for a specific customer and no standard to which distributors can be held responsible for what they sell. Once investors get duped into signing consent forms, redress seems unlikely. The evidence that the current redress systems are effective in providing relief to customers is also very weak.

Early regulatory responses

The response from Indian regulators has been in the form of policy changes that should prevent mis-selling that has been seen in the past decade. The key milestones are:

• Ban on entry loads on mutual funds , SEBI, August 2009
  
  


• Cap on ULIP commissions, IRDA, October 2009
  
  


• Order on regulation of ULIPs, pointing out that ULIPs are inherently fund management products, SEBI, April 2010
  
  


• Changes in ULIP product rules, including surrender charges, IRDA, September 2010
  
  


• New rules for NBFC-MFIs for lending in micro-finance, RBI, July 2012.
  
  


• Regulations on investment advice, SEBI, January 2013.

Each of these initiatives is an incremental response by a regulatory agency that became uncomfortable with the status quo. However, they do not add up to a comprehensive and internally consistent strategy for consumer protection, and they are not adequately rooted in law. One regulator has banned commissions for a product, while similar products are permitted to charge commissions under a different regulator. Various distributors such as banks come under far less scrutiny on distribution because they fall under a different banking regulator. SEBI regulations on investment advisors do not apply to agents who provide advice solely on one financial product. This implies that the existing network of agents, including banks, can continue to function in the current framework which does not require agents to act in a fiduciary capacity towards their clients.



Considering the low financial literacy and low access to finance in India, perhaps it is also not advisable to require each agent to have a fiduciary responsibility. There is a strong case to be made for simple products that may be sold without the imposition of high suitability standards. However, no such provision exists in the current regulations. The micro-finance regulations focus predominantly on prudential regulation, even when the problems in the sector arose on issues of customer protection. There is also no understanding of whether the measures imposed have brought about the desired change. A framework for evaluation of the costs and benefits of various regulatory interventions is completely missing from the current regulatory discourse in India, and the response so far has continued to ignore its importance.

The Indian Financial Code will yield transformative change

The Indian Financial Code (IFC) is an important landmark in financial regulation in that it identifies customer protection as a central goal of regulation. The draft law enshrines the customer with rights to prevent mis-selling at the time of sale, and provides for a redress system after an event has occurred. In the IFC, the consumer has a right to get fair disclosure and suitable advice from financial service providers. This recognises that the market for financial products is an uneven playing ground with customers not being in a position to evaluate financial products, especially over long horizons. The code also requires the regulator to undertake measures to promote financial awareness.



The IFC has appreciated the possibility that excessive regulation may have its costs which ultimately get borne by the customer. It has put in place several checks to ensure that regulation is not stifling the market, including that of continuous evaluation of outcomes brought about by policy. Section 54, of Chapter 13 specifies that the financial agency is required to measures the costs and benefits of regulations by using the best available data and the best scientific method when such data is available. There are important connections between the incipient literature on household finance in India, and the requirements for analysis that are embedded in the IFC.

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Addressing ponzi schemes: the three parts of the solution strategy

There is a great deal of moral outrage about ponzi schemes. Parliament is being asked to "do something!". We have seen this movie in India before. Laws are enacted as a knee-jerk response to an event. Quick and dirty responses are poorly thought through, which perpetuates the cycle of underperformance in public administration [example: IRDA/SEBI ordinance, example: MFI bill; example: Lok Pal Bill;].



Laws are the DNA of government, and the drafting of laws should be done with extreme care. The drafting of law should:

• Be rooted in adequate technical expertise from four fields: in the subject matter, in public administration, in law and in public economics.


• Reflect diverse viewpoints and interests


• Be rooted in a consultative process


• Reflect an understanding of international experience


• Be forged out of a sophisticated debate about alternative design choices.

All too often, in India, we rush in to offer a legislative response while cutting corners on these six requirements.

In the field of finance, the process of policy reform began with a committee process from 2005 to 2011 which mapped out the big ideas for policy reform through a series of expert committee reports. This led up to the establishment of the Financial Sector Legislative Reforms Commission (FSLRC) which worked for two years. A cast of 146 participated in the work of FSLRC, which has drafted the Indian Financial Code. In addition, hundreds of people participated in the committee process that led up to FSLRC. If this full process of policy analysis, from 2005 to 2013, had not been undertaken, the solutions at hand would be a lot inferior.

With this knowledge in hand, it is possible to isolate the three elements of dealing with ponzi schemes, which are in the three blog posts that I just put up on this blog:

1. The first issue is the question of jurisdiction: Is X a regulated activity and who is the regulator in charge? (By Smriti Parsheera and Suyash Rai).


2. The second issue is about regulatory strategy, and the Indian Financial Code has three elements that would impinge on ponzi schemes: micro-prudential regulation, resolution and consumer protection. (By Suyash Rai and Smriti Parsheera). The approach is, of course, more general and applies to all savings/investment schemes. But it's interesting and important to understand how this approach addresses the immediate problem that we face today.


3. The third issue is that of the investigation and enforcement process, where certain maladies have afflicted existing approaches. (By Shubho Roy).

Also see The law that can kill ponzis, once and for all by K. P. Krishnan, Smriti Parsheera and Suyash Rai in the Economic Times.

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Regulatory strategy for savings/investment schemes, that would address ponzi schemes

by Suyash Rai and Smriti Parsheera



The first task in dealing with ponzi schemes is correctly defining the scope of financial regulation. Once a firm is classified as a financial service provider, the appropriate regulator must choose a regulatory strategy for it. Assuming SEBI had clear jurisdiction with Sahara or MMM, what would SEBI do?



Safety and soundness regulation (also called micro-prudential regulation) is an expensive form of regulation, which includes requirements relating to maintenance of capital, investment restrictions, corporate governance, risk management systems, etc. This type of regulation can not apply equally to every financial institution. For example, the regulator should be able to distinguish between small member-controlled chit funds and larger chit funds.



Differences also need to be drawn based on the nature of the activity being carried out. Micro-prudential regulation should be less stringent for investment schemes as compared to deposit-takers, given the difference in the nature of promises being made to consumers. However, at the very least, the scheme would require authorisation from the regulator. In the MMM India example, had the scheme sought such approval, its promoters would have to satisfy basic fit and proper person requirements. Given that the scheme has been floated by Sergey Mavrodi, a convicted fraudster and the man behind Russia's largest Ponzi scheme, it is likely that the scheme would have failed on this count.



This points to the need for a sophisticated approach to ensure optimal regulation. The law should allow the regulators to apply safety and soundness regulation wherever required, but the decision can't be left to the regulators unconditionally. The law must provide some guidance to them, to make them accountable. What could be the form of this guidance?



Consider the following examples:

• A bank with Rs. 10,000 crores of deposits from 1 crore depositors.
  
  


• A local chit fund with Rs. 10,000 from 20 members.
  
  


• A chit fund with Rs. 1000 crores from 1 crore members.
  
  


• A hedge fund investing Rs. 1,000 crores, from 50 investors.
  
  


• A mutual fund investing 10,000 crores, from 1 crore investors.
  
  

Where should safety and soundness regulation apply, and what should be the intensity of the regulation? A closer look reveals a few distinctions on four dimensions.



The bank and the large chit fund are more opaque than the others - most of the important information about their asset quality is not visible. That is why we are often taken aback when they fail. In small chit funds, people have reasonable visibility, since the money is with one of the members and is distributed regularly. Hedge funds and mutual funds are also quite easy to monitor, as long as they report fairly, because they invest in securities that visible in the market on a real time basis.



Bank and the chit funds make promises that are inherently more difficult to fulfill - they must return money, irrespective of their financial position. Banks more so, because the deposits are callable at par. Hedge funds and mutual funds invest on behalf of investors, with no guaranteed rate of return and so the market risk stays with the investors. Institutions making promises inherently more difficult to fulfill are at a greater risk of failing to keep the promises.



There is a difference in the influence the consumers can wield over the institution. In a small chit fund, members have significant influence over each other. In game theory terms, they are in a repeated game over a long horizon - small amounts are saved over short periods, and this is repeated. When a few people become managers of funds for a large number of people, the moral hazard problem increases exponentially, and the consumers' ability to influence the institution drops. Similar difference can be seen in the hedge fund (small number of high value investors), and the mutual fund (large number of small value investors).



The institutions differ in terms of consequences of their failure. If a bank or a chit fund fails, many poor and middle class people lose their savings and many suffer significant hardships. We are seeing this in Saradha's case.



Each of these four distinctions is relevant for deciding where safety and soundness regulation should apply. They can be stated in terms of principles, but do not translate into a set of ex-ante rules in terms of institution-types. If the law states them in terms of rules, it may be gamed. The principles, therefore, must be in the law.



Section 151(1) of the Indian Financial Code provides four principles-based tests, based on the four distinctions discussed above, that will help the regulators decide where and to what extent safety and soundness regulation should apply. The regulators will use a combination of these principles to take the decision. For example, it is not enough that the promise is inherently more difficult to fulfill, the institution should score high on some other tests as well. From the five examples listed earlier, the bank and the large chit fund will be intensely regulated for safety and soundness, and the mutual fund would attract some regulation to ensure that it is acting prudently and reporting fairly. The small chit fund and the hedge fund may be largely exempt.

Handling failure

Even among the licensed and regulated deposit-taking institutions, some will become weak. In such situations, there are ways of stemming the decline, and if the institution fails, minimising the loss to depositors. Dealing with failure requires a sound resolution and deposit insurance system. Deposit insurance covers deposits, upto a limit, against the risk of failure of the institution.



At present, banks in India are covered by a deposit insurance system, which, as demonstrated by the experience of many urban cooperative banks, often takes a long time to settle claims. Bank-like institutions, such as deposit-taking NBFCs, are not covered by deposit insurance. Countries like US and Canada have elaborate systems of resolution, which may include sale of the firm, management through a bridge institution, and temporary public ownership. The agencies responsible for resolution are also empowered to take corrective action if a firm's soundness declines. In India, there is no system for resolving failing firms, and no structured framework for corrective action.



Part VII of the IFC provides for a resolution corporation, which will provide deposit insurance to certain institutions, take corrective actions on firms becoming weak and resolve institutions before they become insolvent, by arranging a sale of the firm, managing it through a bridge institution, or facilitating temporary public ownership. Section 260 enables extension of deposit insurance to institutions taking deposits. The regulators, in consultation with the resolution corporation, will decide which institutions will be covered by deposit insurance. This decision will be taken based on tests like the ones proposed for deciding where safety and soundness regulation will apply.

Enhanced consumer protection

The operators of the MMM scheme claim to make full disclosures to their members about the uncertainty of returns and the risk to their funds. But is mere disclosure sufficient to absolve Ponzi scheme operators from all liability? Certainly not. While disclosure and transparency requirements are integral components of an effective consumer protection regime, research shows that when faced with complex financial decisions, consumers often suffer from cognitive biases which can result in sub-optimal decision making.



It is for this reason that IFC contains additional protections when retail consumers are advised on financial products. This is in the form of suitability assessment requirements that compel the managers and distributors of financial products to assess the relevant personal circumstances of individual scheme members and the suitability of the product for their purposes before advising them to join such schemes.

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Investigating ponzi schemes: A malady

by Shubho Roy.

What has happened?

SEBI was investigating Saradha for more than 3 years before the deposit schemes of the company collapsed (See here). Saradha seems to have used two methods to delay the investigation:

1. When SEBI asserted its authority to stop Saradha group from collecting money, Saradha challenged the jurisdiction of SEBI in district courts. It quickly got orders to prevent SEBI interfering in its businesses. These orders were eventually overturned by the High Court.
   
   


2. When SEBI requested information from Saradha about their schemes and investors, Saradha responded by providing large volumes of documentation without specifically answering SEBI's questions. This slowed down the entire investigation.

Why is this a problem?

In those three years Saradha took on new depositors and collected money from existing ones. All this money is now lost. Two years of investigation were required to stop what seems to be a run of the mill ponzi scheme.

The tactics employed by Saradha are not new. They are similar to those employed by Sahara in delaying investigations in the OFCD schemes and in many other white collar crime investigations. The disturbing fact is that they seem to succeed time and again. While SEBI has wide powers of entities registered with it, if someone does not register with SEBI, the system of enforcement of laws changes completely. The current system requires SEBI to approach the local courts for prosecuting violations of the SEBI Act which constitute an offence. Moreover, SEBI cannot directly appoint lawyers for prosecuting the offences and must rely on the state government prosecution machinery to get criminal prosecution started.

The source of these difficulties

The present system suffers from a number of weaknesses, two of the most important are:

1. The normal court systems do not have the time or expertise to enforce violations of investment and securities laws. This leads to confusing orders which sometimes exceed the jurisdiction of the courts. Even in the case of Saradha, the High Court set aside the orders preventing SEBI from exercising its powers over Saradha, noting that the courts were out of jurisdiction when they prohibited SEBI. However, High Court orders take time, and in this time period the operator of the ponzi scheme can continue to collect money or misappropriate the money already deposited. Expertise in deciding jurisdiction and applicability of SEBI laws is also not available in most normal district courts. It will be extremely expensive and wasteful to train all district judges in securities laws for the once-in-a-decade case in financial laws.
   
   


2. The use of state public prosecutors for violations of financial laws is problematic for two reasons. First, the normal public prosecutors office is flooded with normal criminal cases like theft, murder, etc. A complex financial law case will never be the priority of the normal public prosecutors office. Second, the average public prosecutor who is extremely busy with the daily load of run of the mill criminal cases is not trained investment and securities laws. Just like district judges, it is not cost effective to train all public prosecutors in securities laws.

How would this work under the IFC?

The Indian Financial Code, drafted by the Financial Sector Legislative Commission, addresses these issues in the following ways:

1. The whole system of investigation is formalised under an investigator appointed by the regulator. The terms of reference for the investigator, the system of investigation and the time for investigation has to be written down at the onset. Since all incomplete investigations will require extensions, there will be system of raising alarms for an unusually long investigation. See draft clause 394 of the IFC.
   
   


2. The code allows the investigator to apply for a warrant for the search and seizure of documents. The investigator does not have to go to the area where the scheme is operating. He can apply for a warrant with the magistrate where the head office of the regulator is situated. This allows the government to create a special magistrate's office. This magistrate can be trained in issues of finance and fraud and be a proper judicial check for warrants. See draft clause 396 of the IFC.
   
   


3. The code also allows the financial agency to make an order preventing transfer of any money or assets pending an investigation if there is a reasonable fear that the assets of clients are at risk. Any violation of such orders is also punishable by imprisonment up to five years. See draft clause 398 of the IFC.
   
   


4. The code empowers the central government to set up special courts to try cases involving the violation of investment laws. This allows for far quicker and more efficient disposal of cases. These courts will be district courts and follow all due process of law required under the Evidence Act and the Criminal Procedure Code. However, unlike general criminal courts, judges in these courts can be experts in securities and investment laws. See draft clause 417 of the IFC.
   
   


5. Finally the code envisages that the financial sector regulator appoints its own lawyers to prosecute cases of criminal offences. These lawyers will have the same powers as a prosecuting lawyer under the criminal procedure law. Since most financial regulators have legal officers on staff today, this allows specialised expertise to head the prosecution of these crimes rather than a generalist public prosecutor.
   
   

The strategy used in the IFC is similar to that used in securities laws in the U.S., where dedicated federal court benches are used to prosecute securities frauds. Even in India, special courts and prosecutors have been created for the CBI and for prosecution of offences under the Prevention of Corruption Act. The longer a ponzi scheme lingers the more victims it accumulates. The Indian Financial Code provides a system to effectively shut down schemes like these and a specialised criminal law system to prosecute violators.



The loss of critical savings by many have raised demands for retribution. A hurried response to such demands can bring in laws which dilutes the principle of `innocent until proved guilty' or reduce the procedural and evidentiary standards. The Code scrupulously avoids this by placing the power of issuing warrants and convicting offences on the same standards as envisaged in the laws of evidence and criminal procedure. However, it addresses the problems of a slow judicial system and dedicated expertise in resolving financial crimes.

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Correctly defining the scope of financial regulation so as to block ponzi schemes

by Smriti Parsheera and Suyash Rai.

Attack of the ponzi schemes

The Saradha Group has gained notoriety in recent weeks with outstanding public deposits reportedly exceeding Rs.200 billion. There was anger and panic. The state government has stepped in with partial redress.



As we watch this saga unfold, there may be another crisis waiting to happen in the form of a pyramid scheme offered by `Mavrodi Mondial Moneybox (MMM)' that is taking rural India by storm. MMM claims to be a `social financial network' in which members voluntarily share money with each other by buying and selling MAVROS - a currency-like unit devised by the operators of the scheme. MMM claims to generate returns of over 40% per month, although the returns are not guaranteed. It may be a ponzi scheme: one where money collected from new investors is used to pay returns to old investors. The cycle will continue till inflows into the scheme exceed outflows.



Saradha and MMM are not isolated examples. Other recent schemes have involved promises of unrealistic returns from investments in goats, pigs, emu, teak wood and potatoes.



The history of savings and investments in India is replete with tragedies where financial firms fail to return deposits or investments. This is particularly problematic in a country where 70% of the people earn under 2 dollars a day and hence have small amounts of money saved up. If savings are not safe, the central objective of regulation - consumer protection - is not met. What we need is for institutions that take deposits or run investment schemes to operate in a safe and sound manner, within the bounds of financial regulation.

Under-regulation

Under the present system there are many institutions that offer deposit or investment services without any form of approval or regulation. Under a fragmented regulatory system, hazy lines of work have been drawn between financial regulators, the Central Government and State Governments. This has led to the problem of under policing - anything that does not fall squarely within the lines tends to pass unnoticed from under the radar of regulation. Saradha presents a good example - its activities could be argued to fall under any of the following categories: running a collective investment scheme (regulated by SEBI); running a chit fund (regulated by the state government); a private company taking deposits for its business (regulated by the Registrar of Companies); and taking public deposits as a non-banking financial company (regulated by RBI). The Saradha Group chose to seek permission from none of these.



There is also inconsistency in the manner and extent of regulation of financial institutions performing similar activities. For instance, 265 non-banking financial companies and 18 housing finance companies are allowed to take public deposits, but they don't enjoy the same deposit insurance protection that is available to banks. If the main rationale for deposit insurance is to protect depositors from the risk of a financial institution becoming unable to make good on its promise to refund public deposits, should the same logic not apply to all deposit takers?



Chit funds, which are governed by State governments, also suffer from the problem of inconsistent treatment. Differences in enforcement levels across States have resulted in some States becoming more prone to ponzi schemes. In addition, most this sector may be operating in the form of unregistered chit funds: it is estimated that registered chit funds have collected Rs.300 billion worth of deposits while the collection of unregistered funds is much higher at Rs.30 trillion.



The regulation of collective investment schemes that come under SEBI's scanner has also left much to be desired. This is largely on account of the restrictive mandate. Section 11AA of the SEBI Act defines "collective investment schemes" in terms of principles to identify such schemes, but it contains exemptions for institutions such as chit funds, nidhis and cooperative societies. Pointing to the huge investment grey market that plagues the financial sector, the SEBI chairman U. K. Sinha observed that the loopholes in the existing laws are the primary cause for the situation. He pointed out the need for a single regulatory body to look into the regulation of all companies that take illegal deposits from the public.

Eliminating the threat of ponzi schemes: The sound answer

The draft Indian Financial Code (IFC) framed by the Financial Sector Legislative Reforms Commission (FSLRC) presents a comprehensive solution to address the problems of under-regulation. The FSLRC has recommended a clearer and more comprehensive regulatory architecture as compared to what we currently have - RBI would regulate banking and payments, and a Unified Financial Authority (UFA) would cover all other financial services and products. Within this structure, there would be no scope for confusion about who should regulate a Saradha or MMM India as this responsibility would clearly vest with the UFA. This will also bring about more consistency in the regulatory treatment of a range of institutions undertaking similar activities, irrespective of the institution-type.



A central law like the IFC cannot address the problem of dual regulation of cooperative banks, which are regulated by the state governments and the RBI. The FSLRC has recommended that state governments accept the authority of Parliament (under Article 252 of the Constitution) to legislate on regulation and supervision of co-operatives carrying on financial services. Once they do that, financial regulation can fully apply to these institutions.

Defining financial products and services

In the IFC, the definitions of financial products and services are broad and principles-based, with no statutory exemptions. All kinds of deposit-taking and investment schemes (including chit funds) are covered by these definitions. A deposit is defined as a contribution of money, made other than for the purpose of acquiring a security, which may be repayable at the demand of the contributor. In Section 2(90), an investment scheme means:

any arrangement with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangement, whether by becoming owners of the property or any part of it or otherwise, to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income, where:

• persons participating in such schemes do not have day-to-day control over the management of the property, whether or not they have the right to be consulted or to give directions; and
  
  
• the arrangement has either or both of the following characteristics:
  • the contributions of the participants and the profits or income out of which payments are to be made to them are pooled; or
    
    
  • the property is managed as a whole by or on behalf of the operator of the scheme.
  
  
  
  

Anyone in the business of accepting deposits or managing investment schemes would need to get authorisation from the UFA. Accordingly, both Saradha and MMM would be covered under the IFC, the former as a deposit-taking firm, and the latter as an investment scheme. In case of the MMM scheme, a unit of MAVRO is the underlying property in which the members invest. The other tests of the definition are also met as the scheme members do not have the ability to control the unit, which is managed by the operators of the scheme.



The IFC also empowers the central government to expand the definitions of financial products and services. When a new financial product or service is observed, instead of waiting for an amendment to the law, the Central Government can include the new product or service in the definition.

Conclusion

Given the limitations of existing financial institutions in meeting the savings and investment appetite of all Indians, innovations in this field are both inevitable and necessary. However, to ensure that this does not happen at the cost of consumer interests, the scope of formal financial regulation needs to be expanded to include large segments of the currently excluded investment grey markets. This also requires us to move away from the present system of having regulatory responsibilities divided among financial regulators and State Governments. The FSLRC's draft law offers a viable solution in terms of conferring the duty of regulating all investment schemes on a single regulatory body that will be fully accountable for this task. The complete, principles-based framework of definitions, that can adapt over the years, will also help minimise regulatory gaps.

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How to make progress on payments: a talk

I did a talk How to make progress on payments at the Payment Inclusion Roundtable hosted by the MicroPension Lab of Invest India Micro Pensions:









This is part of the NIPFPMF channel at youtube.

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Who is in charge of fiscal policy and tax policy?

In any country, various arms of government like to indulge in taxation of their own choice, and in setting up little treasuries that they control. However, it is quite clear that there must be only one treasury, and only one authority that determines taxation, through only one Finance Act.



In the Economic Times today, I have an article that applies this idea into analysing a recent proposal by DOT to impose an 8% tax on wireline broadband providers.



You may find some of the associated materials useful:

1. Consultation paper issued by DOT on this in December 2012.


2. National Telecom Policy, 2012.


3. TRAI recommendations on broadband.

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