Banks asked to unwind guarantees to FIIs

Foreign institutional investors (FIIs) from now on cannot avail of guarantees (irrevocable payment commitments) from banks for their payment obligations at the stock exchanges. In a circular to banks on capital market exposure, the Reserve Bank of India (RBI) has said entities such as FIIs are not permitted to avail of fund or non-fund based facilities such as irrevocable payment commitments (IPCs) from banks, under the provisions of the Foreign Exchange Management Act (FEMA). Banks have been asked to unwind all such guarantees given on behalf of FIIs within six months starting today. The RBI’s regulations under FEMA state that the payment for buying shares by persons resident outside India has to be made through inward remittances, with non-resident Indians (NRIs) having the option of paying through debits in their bank accounts in India. An official with a private sector bank, which was already including loans to mutual funds as capital market exposure, said this would have a marginal impact as only a few banks had not included loans to mutual funds in their capital market exposures.

Bank loans to equity MFs to be part of capital market exposure

Bank loans to equity-oriented mutual funds will now form part of the bank’s total capital market exposure, said the Reserve Bank of India. In its note the RBI said, “Banks are advised to be judicious in extending finance to mutual funds and grant loans and advances to mutual funds only to meet their temporary liquidity needs for the purpose of repurchase/redemption of units.” A senior official from a public sector bank said, “A short term loan to a mutual fund is a standby facility in any case. In India we have not seen a stage, as yet, of large-scale redemptions, which would make mutual funds approach banks for loans.” The RBI also said that irrevocable payment commitments (IPCs) issued to stock exchanges at the request of mutual funds for their secondary market purchases would also form part of banks’ capital market exposure. This facility, too, is not something that mutual funds normally use, the bank official said.

If you use CyberCafe to do Banking Transaction, Then you must read this

Every time you make an online bank transaction at a cyber cafe, you run the risk of losing all the money in your account, since you could leave traces of your password on the computer. A 27-year-old hacker, who used special software to get nearly 100 bank account passwords from cybercafes, was arrested in Bangalore. "It's a major crime," said SP (Cyber Crime-CoD) B A Mahesh. The hacker is Joseph, a diploma holder in computer science from Virudhunagar district, Tamil Nadu. A Bangalorean since 1999, he worked as a data entry operator before losing his job two years ago. Joseph came under the scanner of sleuths investigating a complaint lodge recently by Carl Braganza, HR manager at a software company. Braganza claimed that someone had hacked into his Citibank account on Oct 10 and defrauded him of Rs.1.27 lakh: Rs.87,200 was used to recharge cellphones and Rs.40,000 transferred to another bank account in Mumbai. The sleuths traced the hacker's IP address to Anu Cyber Cafe in Mahadevapura. They zeroed in on Joseph on November 29. When interrogated, Joseph confessed. Mahesh said Joseph visited cybercafes and installed a free software called 'Key Logger' on computers. "The software captures every stroke on the keyboard. If a person is checking his bank account on the net, all the details are recorded," he said. The number of visitors to cybercafes is high during the first week of the month, when people come to check their salaries. Joseph then went to the computer where he had installed the software and retrieved the data. Once he had the account details, he transferred money to his associates, who charged him a commission. The group recharged others' cellphones at discounted prices from the hacked accounts. " It is similar to a cellphone thief selling a stolen handset for half its original price," sleuths said. Some DOs and DON'Ts for those assessing sites at cyber cafe. DON’Ts Don’t leave personal documents at places where it can be picked up or viewed by others. Don’t log into online account from an insecure network. Don’t enter your log-in details on a website unless you are sure it is secure. A lock at the bottom or ‘https’ in the address field are signs of a secure website. Don’t follow links to banking sites. Don’t respond to e-mails that ask you to enter your bank details. Dos Type the bank’s URL yourself. Use other methods to enter details. Some banks have on-screen keyboards to avoid key presses. Scan your computer and update anti-virus software regularly. Times of India dated 15.12.2007