Vittal cautions IT cos against scam

He referred to the perception that IT companies are making a lot of `indecent profit’. "The current boom in the stock market, which is riding on the IT companies, also strengthen this perception," he said.

Vittal stressed the need for computerisation in banks in a serious bid to avoid scams and said that at least 70 per cent business of banks should become computerised by January 2001. He emphasised the need for a total integration of transactions by applying IT in the bankingsector.

According to him, of 45,439 branches of public sector banks, 8,998 are eligible for computerisation. So far only 5,000 bank branches have been computerised.

Vittal said that the Reserve Bank of India governor Bimal Jalan is convening a meeting of all public sector banks on February 11 to take stock of the situation of computerisation front and chalk out future course of action. He added that thrust of computerisation by RBI has been on 125 centres in the country which contribute for more than 60 per cent of the deposits and over 72 per cent of the credit.

The major thrust areas of computerisation will be development of an integrated payments system to ensure faster funds flow in a secure environment, setting up of a Wide Area Satellite based network system – INFINET (for the Indian Financial Network). The thrust areas will also include branch automation and computerisation of clearing operations at the 125 commercially important centres.

Vittal said the sensitive nature of banking operations,need for secrecy, prevention of fraud and security must be taken into account while introducing computerisation. He called upon the IT companies to come up with encryption software.

The CVC emphasised the need for building up confidence among the staff by ensuring how frauds can be controlled. He said that competent manpower should be created to run the system and added that there exists scope for inducting direct recruit for entry at higher levels, technically competent people in the banks where necessary to see that computerisation is smoothly done.

Meanwhile, chairman and managing director of Bank of Baroda K Kannan said loans to the software industry having credit limit upto Rs 1 crore from the banking system will be eligible for inclusion under priority sector (small scale industry). Bank of Baroda has constituted an Information Technology Financing Cell at its central office at Mumbai to process all fresh proposals, he said.

After releasing the BoB’s paper on "working capital finance" by Vittal,Kannan said for ancillary units to the established software Indian companies the projected turnover will be Rs 50 lakh per annum and above. The criteria of one year past track record may be relaxed in deserving cases. However,"companies should have satisfactory back-up arrangement with management team having requisite academic/professional skills, work experience in software development and marketing."

Working capital requirement for software companies with a turnover upto Rs 2 crore will be 20 per cent of turnover while for those with turnover over Rs 2 crore, it will be on the cash budget basis. Monthly cash budget system will be followed for arriving at Permissible Bank Finance.