Sudhir Mulji: Identifying by fingerprints

It is a paradoxical feature of the Indian system that as we globalise and integrate with the world economy, we simultaneously and gleefully take such steps as will ensure the apprehension of others by our discordant approach.

A good recent example is the contrast between the Prime Minister's hospitable invitation to the global community to invest $150 billion in India, while simultaneously the Securities and Exchange Board of India (SEBI) has just announced uncongenial regulations requiring the obnoxious and distrustful act of providing fingerprints by significant market participants.

For those unaware of the emotional dispute that this adoption of biometric identification could create, it may perhaps be useful to run through some of the history and facts of fingerprinting, particularly its present status in Western countries.

First, it should be said that the use of fingerprinting by the authorities is not at all commonplace in other parts of the world and is generally confined to seeking evidence in criminal offences.

But even in such cases the power to use this system of identification by fingerprinting is carefully circumscribed.

The English Code of Practice of the Police and Criminal Evidence Act, 1984, introduces checks and restraints on the use of identification by fingerprints.

Section 3 of the Code states: "A person's fingerprints may be taken only with his consent and if he is at a police station consent must be in writing."

This general requirement is then qualified in paragraph 3.2 to state that "[p]owers to take fingerprints without consent, from a person detained at the police station, is only permissible if an officer of the rank at least of superintendent has reasonable grounds for suspecting that the fingerprints will tend to confirm or disprove involvement in a criminal offence."

And finally, "[t]he fingerprints of a person and all copies of them must be destroyed as soon as practicable if the person is either prosecuted or cleared", with "[a]n opportunity of witnessing the destruction of these copies must be given to the person if he so wishes."

In contrast to this limited authority granted to the English police only for use of fingerprints in criminal offences and with the right to the accused of having copies destroyed once the purpose is finalised, SEBI has claimed unlimited rights to obtain fingerprints from investors.

Indeed, they have made it mandatory for all directors, promoters and associates of a company to provide their fingerprints not because they are accused of a criminal offence but to allow them to sit on the board of a company to which they have been elected or co-opted as director. Further, the company is required to obtain biometric data of all promoters and associates of the company before the company is allowed to participate in the securities markets.

Thus, in anticipation of potential criminal activities by directors of companies, SEBI is arming itself with weapons that will assist identification of directors tracing them through their fingerprint. With what resources SEBI will actually find these persons with their copies of fingerprints is not yet known, but they will certainly spend public money to chase will-o'-the-wisp persons who may have disappeared.

But expenditures of public money are never a deterrent to self-righteous regulators. The general argument that the investing public should be protected against swindlers is thought to be just cause for a minor invasion of privacy.

The potential misuse of our rights by a bureaucracy inflated in its own importance never occurs to the general public. Yet to investors from the rest of the civilised world this requirement of SEBI will not go unnoticed and may divert the flow of funds to other less invasive markets.

There is no part of the civilised world that places such demands on investors or directors and the fact that we do so quite demeaning to India's nationhood.

It is argued that the demand for fingerprints for commercial business has always been commonplace in India. For example, property contracts in India have always required fingerprints to be affixed as part of the contract.

Those who argue thus forget that these rules were introduced by the colonising British to distinguish the native Indians.

In 1858 the chief magistrate of the Hooghly district in Jungipoor, William Herschel, on a whim had a local businessman Rajayadhar Konai impress his hand on the back of a contract "to frighten him out of all thought of repudiating his signature".

The native was suitably impressed and this piece of colonial imperialism was extended to subjugate the native population who believed that the fingerprint made the contract more binding than their signature.

This ploy against a population thought to be illiterate and capable of forging is now proposed by SEBI as an appropriate remedy to catch fraudsters.

It displays, as the earlier practice did, contempt for the native population that the rulers held for those they ruled. But whether such an arrogant demonstration of power is suitable in a free society that has achieved its independence precisely by fighting this type of racial prejudice should be a matter of deep concern.

It is not the efficacy of the fingerprinting system that is to be questioned but its appropriateness to modern India.

At the heart of the issue is that SEBI wishes to ensure that every participant in the Indian securities market should possess a unique identification number.

There is perhaps nothing wrong in this demand though it is probably as purposeless as any other regulation of this kind. All that it will achieve is that SEBI will be able to acquire data that will remain unanalysed for many years.

But the message it will send to the world is that Indians are so illiterate and inclined to forgery that even an attested signature is suspect to their own authorities.

And if non-residents are tempted to invest in India, they should look to themselves with care, the system is so fragile and untrustworthy that without biometric tests you cannot rely upon Indians. It seems to me a deplorable outcome initiated by those who are quite unaware of investment practices and procedures in the rest of the world.

It will be argued the bulk of potential market participants have willingly complied with SEBI's demands, however onerous they may seem to a few.

Indian courts have tested the provisions and found nothing wanting in them, but as Thomas Jefferson pointed out in the Declaration of American Independence: "all experience [has] shown that mankind are more disposed to suffer while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But, when a long train of abuses and usurpations, pursuing invariably the same object, evinces a design to reduce [the people] under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security."

SEBI's new rules are a form of despotism imposed as a continuation of India's colonial past, where the freedom of individuals was always made to succumb to the convenience of the administrative system. That this should have been justified only reflects the willingness of a suborned people ready to suffer while evils are sufferable.

(The opinions expressed in this paper are personal to the author and do not reflect the views of any organisation)

sjmulji@aol.com