RBI tells banks to replace defective 1,000-rupee notes

Out of 300 million defective banknotes that were printed in one of the printing presses of government-owned Security Printing and Minting Corporation of India, about 100 million of those notes have hit the market leaving the general public in a tizzy.

About 200 million pieces were transferred to the RBI’s currency chests, some of which was then loaded in banks’ automated teller machines, sources close to the development said.

Currency experts said that the checking of notes is done at the press-level and the banking regulator is not involved with checking each and every banknote.

An RBI spokesperson has confirmed the development and said banks have been asked to replace such notes with the central bank, when found. Banks have also been advised to replace such notes whenever a customer approaches them. The notes are genuine though they are defective, the spokesperson said.

There are four printing presses which print and supply banknotes. These are at Dewas in Madhya Pradesh, Nasik in Maharashtra, Mysore in Karnataka, and Salboni in West Bengal.

The presses in Devas and Nasik are owned by the Security Printing and Minting Corporation of India (SPMCIL), a wholly owned company of the Government of India. The printing of the notes in Karnataka and West Bengal are done by the Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), a wholly owned subsidiary of RBI.

Sources said the defected notes were printed in the Nashik press while Security Paper Mill of Hoshangabad produced the currency note paper. The security thread was missing in the defective pieces, the sources said. The 1000-rupee notes which was introduced in October 2000, contain a readable, windowed security thread alternately visible on the obverse with the inscriptions ‘Bharat’ (in Hindi), ‘1000’ and ‘RBI’, but totally embedded on the reverse.

As on March 31, 2015, there were 5,612 million Rs 1000 denominated notes in circulation which constitutes 6.7 per cent of the total notes in circulation. In terms of value, Rs 1000 denominated notes constituted 39.3 per cent of the total value of notes in circulation.

Notes of denominations of Rs 500 and Rs 1,000 together accounted for approximately 85 per cent of the total value of banknotes in circulation at end- March 2015. Notes of Rs 10 and Rs 100 together accounted for 54 per cent of the volume at end- March 2015, RBI data shows.

Caution Sign: Don’t Look to Small Business for Job Growth

Caucasian businessman working on patioNEW YORK — Don’t look for a small business boom anytime soon.

Many company owners aren’t interested in expanding, and many have no plans to hire.

They don’t trust the economy. In a survey released in September by Bank of the West, 80 percent of nearly 500 small business owners called the economy a barrier to growth.

There are indeed signs the U.S. economy may be slowing because of weakness in trading partners like China and Canada. Earnings are down at many big U.S. companies, and manufacturers are exporting fewer goods. These developments have an impact on small businesses and contribute to a vicious cycle — when small companies aren’t trying to grow or hire, it helps slow the economy further.

They’re saying, ‘2015 hasn’t been as great as we thought it was going to be. I’m not ready to invest or hire.’

Owners’ caution was clear in September hiring reports, including one from payroll company ADP (ADP) that counted 37,000 new jobs at its small business customers, down 63 percent from a monthly average of nearly 100,000 the first eight months of the year.

Owners were more optimistic in the spring when the economy was recovering from a tough winter, according to the National Federation of Independent Business, whose Small Business Optimism index was at a high for the year of 98.3 in May; in September it was at 96.1.

Gene Marks, owner of The Marks Group, a consulting firm based in Bala Cynwyd, Pennsylvania, says the owners he’s spoken too aren’t as confident as they were earlier this year.

“They’re saying, ‘2015 hasn’t been as great as we thought it was going to be. I’m not ready to invest or hire,’ ” Marks says.

Uncertainty about the economy piles onto concerns individual owners have about their businesses:

Once Burned, Twice Shy

Brent Ridge and Josh Kilmer-Purcell have always known a weak economy could threaten their business selling products like food, clothes and bedding made on farms.

They started the company, Beekman 1802, in 2009 after both lost jobs to the recession. They’ve built the business by reinvesting money they’ve made back into it, never taking on debt.

“We believed the reason the economy faltered was because people were playing around with money that wasn’t theirs,” says Ridge, whose company is located in Sharon Springs, New York.

They’ve added two or three people a year the past few years, bringing their staff to 11, after getting a deal to sell pasta sauce to 250 Target stores. Now, the discount store chain wants their products in all its nearly 1,800 stores.

Still, while Ridge says the company has been thriving, he and Kilmer-Purcell plan to hire only when they really need to.

“I don’t think there’s ever going to be a time when we throw caution to the wind,” Ridge says.

Learning From the Past

Orit and Robert Pennington learned taking on too many employees can jeopardize a company.

TPGTEX Label Solutions was successful after its 2002 start, and grew to a staff of about 15. But the Houston-based company, which makes software to print barcode and other labels, didn’t have the income to justify its expansion.

The Penningtons had to downsize, and by 2013 they and a freelancer were the only employees.

“We were doing things too fast and the business model was not perfect,” Orit Pennington says.

The company is growing again, adding four employees in the last year. But the Penningtons have turned down opportunities to significantly expand the business.

Uneasy Clients

Annie Pace Scranton has the money to pay another employee for her company, Pace Public Relations, but she’s hesitant to hire.

She can’t be sure her clients, many of them medical practices or other small businesses, won’t cut their marketing budgets and in turn, her revenue.

Scranton already has some saying they don’t have the money for marketing. Others hire her five-year-old New York-based firm for several months rather than a year or more.

She’s using more freelancers when there’s more work than her staff of three full-timers can handle.

“I don’t think it’s smart or fair to a prospective employee to hire them when I can’t commit to supporting another salary,” she says.

Why Banks Want You to Drop Mint

Female hands using mobile bankingMillions of people share their bank account passwords with third-party sites and apps that help them track their spending, but some of the biggest financial institutions, wary of hacking risks, are trying to scare people into not using them.

JPMorgan Chase & Co and Capital One Financial Corp, for example, warn on their websites that customers could be liable for any fraud in their accounts – even though federal regulations say otherwise.

Capital One’s site (here) tells users: “If you choose to share account access information with a third-party, Capital One is not liable for any resulting damages or losses.”

Chase (here) admonishes, “If you give out your chase.com user ID and password, you are putting your money at risk.”

The warnings were enough to cause Morris Armstrong, a registered investment adviser and enrolled agent in Danbury, Connecticut, to recently close his account with Mint.com, a so-called aggregator website and a division of Intuit Inc.

“People are hacking left and right. You don’t want to make it easier,” Armstrong said.

However, the same warnings infuriated heavy Mint user Mark Ranta, head of digital payments at ACI Worldwide Inc, who says the banks are far more worried about competition from these aggregation sites than about electronic safety.

“Mint makes it so I don’t have to go to the individual bank sites,” said Ranta. “They [banks] don’t have the opportunity to cross-sell me.”

The banks’ warnings, however, are off base.

Federal banking rules known as Regulation E (here) sharply limit customers’ liability for unauthorized electronic transactions from their accounts, provided they report the fraud promptly.

The rules say that customers’ negligence – such as writing a PIN on a debit card – does not increase their liability.

A customer would be on the hook for unauthorized transactions if she gives her card or credentials “and grants authority to make transfers to a person (such as a family member or co-worker) who exceeds the authority given,” the rules say. Customers are fully liable for the transfers until they notify the financial institution that the person is no longer authorized to use the account.

That is the passage that Chase and other banks point to when warning people they may be liable if they share credentials with a third party.

But Lauren Saunders, associate director and managing attorney of the National Consumer Law Center, calls the banks’ position “ridiculous.” Sites such as Mint collect data about transactions but typically are not authorized to make transactions, said Saunders.

“When you give Mint your bank password, you don’t give them permission to make transfers,” Saunders said. “You don’t need to be a lawyer to understand that you are not a consumer who ‘grants authority to make transfers.'”

Even when people use a bill-pay app that does move money, they are granting access to the app – not to hackers who steal their credentials.

“You are still outside the provision about giving someone an access device because you didn’t give the hacker permission,” Saunders said.

Who would be liable, though, is an unsettled question of great concern to banks. The Wall Street Journal reported last week that JPMorgan Chief Executive Jamie Dimon discussed with Consumer Financial Protection Bureau chief Richard Cordray the security risks posed by aggregators.

Chase and the CFPB declined comment. Intuit declined comment on the banks’ warnings, saying in a prepared statement: “Delivering secure and seamless connectivity is a shared priority across Mint and thousands of our financial institution partners.”

It is worth pointing out that Mint has never had to announce a security breach – unlike Chase, which last year reported a cyber attack had compromised 83 million of its accounts.

Making people reluctant to use account aggregators could just make them more vulnerable to fraud. Mint and other account aggregators can help people spot unauthorized transactions that might otherwise go unnoticed, said independent journalist and technology expert Bob Sullivan, author of “Stop Getting Ripped Off.”

Rather than scaring people, the financial sites and banks should work together to create a common secure standard for sharing information – one that might involve app-specific passwords, Sullivan said.