[Reader-list] News Items posted on the net on Multipurpose National Identity Cards-90

[Taha Mehmood]

http://www.indianexpress.com/news/Investors%92-trip-to-harassment:-multiple-ID-numbers----/20896/

Indian Express >  Edits & Columns >

Sucheta Dalal Posted: Jan 15, 2007 at 0252 hrs IST


Investors' trip to harassment: multiple ID numbers

Last week, we pointed to the mindless multiplicity of paperwork
because each financial regulator is separately implementing know your
customer (KYC) rules under the Money Laundering Act. This is causing
needless hardship to ordinary people.

In a week when the Sensex has jumped over 700 points, it would be
naïve to expect that investors' paper-work problems will catch the
attention of Government policy makers. But the hurdles to acquiring
valid identification proof warrant discussion before the insurance
regulator, the Telecom regulator (already required for mobile phones
and CAS connections) and the electricity regulator also order another
round of identification cards by threatening to block services.

S. Anand, an investor, makes some pertinent points in his letter to M.
Damodaran, chairman of the Securities and Exchange Board of India
(Sebi). He says, ordinarily a citizen would not quibble with the idea
of obtaining a MIN (mutual fund identification number), which promises
to dispense with the need for repeated submission of identification
documents. But it has turned bizarre because Sebi made the same
promise when is launched MAPIN (a biometric identification for all
investors) that was abandoned after thousands of people had already
obtained it.

Anand says, "In a country that calls itself the IT capital of the
world, is it not possible to simply convert the UIN/MAPIN to a MIN?
Should not a rose by any name smell just as sweet?" He is absolutely
right. But that would have required National Securities Depository Ltd
(NSDL) to share the MAPIN database with rival Central Depository
Services Ltd (CDSL), which is creating the MIN database for
Association of Mutual Funds of India (Amfi). If Sebi had owned the
data collected for MAPIN, it could have been shared with AMFI.

Acquiring the MAPIN was a story in itself. Anand says, "I distinctly
remember standing in a mile long queue at the fag end of 2004 to get
myself fingerprinted so that I could be allotted a UIN/MAPIN. My 73
year old, senior citizen father spent many hours on a congested road,
dodging moving traffic, under a blinding sun, so he could abide by
that Sebi diktat, at great physical cost, not to mention the fiscal
one of funding the procedure. Soon thereafter, we were informed that
this compliance was not essential".

Well, MAPIN was hurriedly introduced by a Sebi chairman hoping his
term would be extended and was rolled out without adequate service
centres or consideration for the aged and infirm. A committee later
said that it was also needlessly expensive.

Security of information collected by the service agents is another
concern for Anand, but there is no clarity on that issue. The facts
are that MAPIN was created by NSDL and MIN by a CDSL subsidiary. After
a detailed inspection of their systems, Sebi had recorded serious
problems with operations and procedures of both depositories and even
recommended management changes. Sebi's inspection reports are not in
public domain, but it is locked in several bruising battles with NSDL
in various appellate forums.

Further, although both depositories are technically under Sebi's
supervision, it had absolutely no power to regulate or even inspect
their non-depository operations. This would include the extensive Tax
Information Network set up by NSDL, the database of IT professionals
that it is creating for Nasscom through a subsidiary company and now
the MIN database created for Amfi by CDSL's subsidiary.

Even PAN cards for the Income Tax department are being issued by
capital market intermediaries but there is no clarity on who will
regulate any of these from the perspective of data security or
identity theft and who has the power to initiate action in case of
wrong doing.

This writer had raised concerns about the lack of clarity about
depository regulation a couple of years ago. But the Finance Ministry
seems to be busy basking in the euphoria of a three-year monster bull
run to worry about the issue.

As far as MIN is concerned, V.G. Patel of Ahmedabad points out how it
is "proving to be a nuisance for HUF (Hindu Undivided Family) and
Partnerships". HUFs, are being asked to submit a PAN, bank passbook
and registration number as proof of identity. But HUFs do not need
registration and an income tax assessment order confirms their formal
existence. But this is not acceptable to service agents. Partnership
firms face the same dilemma. Since no decision has been made with
regard to their representations, they are currently in limbo.

Gyan Swarup Gupta, a retired senior citizen shares a third problem.
Neither he nor his wife is a taxpayer. He inherited a small number of
shares that he held in physical form. Since Sebi made
dematerialisation mandatory for secondary market transactions, he
opened a demat account. Now the account is frozen until he gets
himself a PAN number. He wonders why he must be forced to get a PAN
card when he may only ever want to exit and dispose his share holding.

Will his voice be heard?

S.P.V. Ramanathan's problem is slightly different. He is being fined
Rs 100 a day, inspite of submitting a PAN card. The name on his PAN
card and his trading account is S.P.V..Ramanathan, while the NSDL
website has expanded his name by spelling his initials. This extends
his name to 25-30 characters that usually fall out of the row of check
boxes. Ramanathan says, "I come from an area where investing in shares
is as old as the BSE and a majority of investors are facing this
problem." He has also done his homework and points to a circular
(IMRD/DoP/Dep/Cir-09/064.8) that allows PAN card proof in such
situations, subject to verification and documentary evidence. But
getting his contention accepted is a fight in itself.

Multiple identity proof options provided by data collection agencies
often dwindles because of sloppy entry of names and addresses by
public sector utilities. We need to pause and get some basics right
before rushing to modernise systems and procedures.