Union Bank of India should learn to protect its Digital Assets

[In continuation of the previous Article]

Naavi has been advocating that Digital Assets need to be accounted for in the balance sheets of its owners. Today it is only under the Personal Data Protection Standard of India or PDPSI that a recommendation has been made to companies to bring the digital assets to the books of account.

By not accounting the digital assets in the books of account we have seen that NCLT declared Net4India bankrupt without recognizing the value of around 3 lakh sticky customers. In many web business take overs, mere “Eye Balls” (namely the number of average visitors to a website) have been valued at over $200/- (Read this old article in Fortune).

When Union Bank of India took over Corporation Bank and Andhra Bank, it inherited two websites namely www.corpbank.com and www.andhrabank.com.

Two years back, www.corpbank.com was valued at $503,200 (Rs 35 crores). (see here). According to another estimate it was worth $52000/-. (Rs 36 lakhs) The exact value may not be relevant. But the fact it had a substantial value is not in doubt. Will any prudent company throw away Rs 36 lakhs or Rs 35 crores worth assets?, when maintaining this asset ownership would have cost only around Rs 800/- per year?

Unfortunately, Union Bank of India has done just that. They have thrown away this asset without understanding its value. Similarly www.andhrabank.com also had a value, may be to a lesser extent.

After the merger, Union Bank of India has not renewed the domain names corpbank.com and andhrabank.com. As a result the two domain names have now been registered in the name of net4solutions and godaddy respectively.

Very shortly these domain names will be bought by Phishing scammers who will host websites which are confusingly similar to Corporation Bank and Andhra Bank respectively and successfully cheat the erstwhile customers of these Banks whose accounts will be in the Union Bank.

At that time, a valid argument of the customers would be that Union Bank of India by its ignorance and negligence failed to hold back the valuable trade mark asset of the merged banks and facilitated the phishing fraud.

The possibility of Union Bank of India failing to take note of the Digital Asset called domain names would have less if the balance sheet of Corporation Bank had shown the value of this domain name even at say Rs 1 if not Rs 36 lakhs or Rs 35 crores. Even if it had been shown as a contra entry on both the asset and liability side at say Rs 36 lakhs, the value would have remained visible.

This is the point we made in the case of Net4India.com which NCLT declared as “Bankrupt” when there was a hidden customer value of around 3 lakh X 200 Us dollars, equal to around 6 crore Us dollars or Rs 420 crores.

This valuation would be available if the concern is valued as a “Going Concern” and the value is preserved during the events such as merger or pre-insolvency evaluation. Once this is ignored, the company will revert to a “Gone Concern” status and the value will drop down to zero.

I would like ICAI to consider this and develop a methodology to bring valuation of digital assets (domain names and other assets such as personal data and non personal data) into the balance sheets.

I hereby request RBI to take note of how Union Bank has not only wasted the value of the assets taken over but also will be exposing the customers to a high Phishing Risk, which would be liabilities which have to be borne by Union Bank of India.

The Board of Union Bank of India should also check how they can atleast re-own the two domain names because there is a “Trade Mark” value associated with them which was passed onto Union Bank due to the merger.

The first thing the Union Bank has to do is to serve a notice to the two registrars and restrain them from selling the domain names to any third party. Later, they can file a buy back request and if the registrars quote an unreasonable price, the Bank should file a domain name dispute and recover the domain name immediately.

In the past, Canara Bank had a similar issue when Canarabank.com had been squatted by another person and the Bank without recovering the domain name simply adopted the Canbak.com and continued the business. After this was pointed out by the undersigned, the Bank got back the domain name through a domain name dispute process.

I am personally concerned with the Corpbank.com issue since I was personally responsible for the purchase of this domain name by Corporation Bank, create the content for the Bank’s first website and hosting it at the time they went public way back in 1997. I am also a continuing customer of Corporation Bank who has become a customer of Union Bank of India because of the merger. It is therefore sad if Union Bank does not manage its digital assets and the name corpbank.com (as well as andhrabank.com) is used by fraudsters to cheat the erstwhile customers of Corporation Bank who continue as customers of Union Bank of India.

Naavi