A flawed business model


The shift to e-stamping is proving to be a real revenue grosser for the Delhi Government and is ending the misuse of physical stamps and their forgery. But e-stamp vendors and customers still have complaints.

Though nearly 100 e-stamping centres have been opened at various banks and Stock Holding Corporation of India Limited offices, there are over 1,100 other registered e-stamp vendors. Most vendors are charging Rs.20 for a Rs.10 e-stamp, Rs.110 or Rs.120 for a Rs.100 e-stamp and Rs.550 for a Rs.500 e-stamp. A few demand even more. While customers are upset at having to pay the extra amount, stamp vendors blame the Government saying the miniscule commission that vendors are paid for the sale of each e-stamp does not cover their operating costs.

Manish Arya, an advocate, has also been a stamp vendor for the past 15 years and has had a loyal clientele comprising individuals, businessmen and companies in Central Delhi. “If I was just an e-stamp vendor my business would have been finished. Each stamp paper costs us Rs.7-Rs.8 in generating but neither the Government nor the SHCIL is reimbursing us this amount. We have no other option but to pass on this cost to the customer. Fortunately, I also provide a bouquet of other services including preparing agreements, affidavits and other registrable legal documents in which I earn profits.”

Because of this flawed business model, Mr. Arya is unsure of the manner in which many registered e-stamp vendors ply their trade. “I am sure many of these vendors are operating from their homes. And in non-commercial areas they could even be charging hefty sums for the smaller denomination e-stamps.” He said stamp vendors have been pushing the Government to levy a stationary charge expense of Rs.10 per stamp paper and thus legalise the extra amount while curbing over-charging of the customer.

At the Tis Hazari courts complex one customer who questioned a vendor on the levying of Rs.120 for a Rs.100 e-stamp was told curtly that he can take it or leave it. The official e-stamp vending centre at the court complex was functioning but customers had to wait at least two hours or longer for their e-stamps to be generated. Many who make bulk purchases use this centre to save money on volumes but grumble about the long waiting time.

The commission that SHCIL gets for the generation and issuance of e-stamp from the Delhi Government is 0.65 per cent of which 0.15 per cent is the commission being paid to stamp vendors. Stamp vendors complain that they are yet to receive even this miniscule commission rate.

The e-stamping process works through a secure website in which the stamp vendor signs in with a login and password. After a data-entry process -- where the names of the parties involved in the agreement, their PAN card details, and property description including financial transaction details are entered -- the e-stamp is printed. Vendors deposit money with SHCIL against which they are allowed to print the stamps. When e-stamps are generated, the corresponding amount is deducted from the vendor’s balance, and when it is exhausted the vendor recharges the account online.

One vendor showed this newspaper a bundle of e-stamps which did not render properly on paper because of an error in his printer. “The e-stamping system won’t allow me to print copies of the e-stamp, to prevent misuse, but the amount has been deducted from my account. My customer, who had ordered a bulk amount of e-stamps, will not reimburse me,” he rued. The vendors are demanding a refund policy for e-stamps rendered useless by hardware/software errors and spelling mistakes in data-entry. He also pointed to the monthly expenses -- salaries ranging between Rs.8,000-10,000 to be paid for data-entry operators, printer costs ranging between Rs.3,000-Rs.4,000, Internet connection costs of Rs.2,000 and electricity costs of Rs.3000-upwards -- in running a commercial establishment, which the Government was blind to.

Inspector General of Registration in the Revenue Department of Delhi Government Nila Mohanan said as part of rehabilitation of the physical stamp vendors, they were given the first preference while applying for the authorised centres. Of about 250 vendors, 170-200 had applied and were allotted authorised e-stamping centres. Many, she said, opted out citing the paltry commission amount. Earlier the Delhi Government used to pay a three per cent commission for the physical stamps papers.

Ms. Mohanan says that authorised centres can be operated by a single person but they are encouraged to set up an office. However, Mr. Arya complains that the process has slowed down his business.

“Each e-stamp takes five minutes for data-entry and printing. In an eight-hour work-day, my staff effectively works for seven hours. I am only able to print a maximum of 130-150 e-stamps a day. To save on turnaround time, I have split the tasks. One person verifies the customer’s details on paper, another then does the data entry on a computer, then the entries are verified for spelling mistakes, and another person does the printing of the e-stamp on another computer. Earlier, physical stamps were dispensed noting just the bare details of the customer.”

Some stamp vendors complained that since July when e-stamping for less than Rs.501 denomination began, they have lost 75 per cent of their customers partly due to the inability to print stamps quicker and partly because customers have more options now to purchase e-stamps. But all of them admit that the reduced ability to misuse the e-stamps and the end of fake stamp papers far outweighed in terms of public good the logistic problems that e-stamps have brought in its wake.

(With inputs from Gaurav Vivek Bhatnagar)

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Printable version | Feb 24, 2017 12:31:57 AM |