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Showing posts from November, 2016

Why demonetization turned out to be a dud excercise

The much talked about the decision by Prime Minister Modi to demonetize most of our currency will turn out to be dud as it has drastically failed on its key objective. The goal The major goal as announced to invalidate the 1000 and 500 currency was to weed out black money and corruption. A minor aim was to work ahead with the noble idea of the Prime Minister to push for a less cash/ cashless society.  A major failure However, the idea failed big time. You go to any bank in India today, ask people who are in the know of things and they will tell you the exact commission being charged by bank staff to convert your cash into a new currency. The commission ranges from 25-35% . If you had 50 lakhs under your mattress, you will still have most of it, before November ends and can shove it back under the mattress.  But this simple idea came later. First came the usual plain boring ideas. Put money in gold. Clear your past dues in old cash. Pay a commission to money launde

Is it time for redemption for Indian Banking System

Indian banking system is a sad story. We have one of the largest concentrations of government dominated banks around the world. India has also a rigid and strict regulatory system for banks. Such is the inscrutably of the regulators that they encourage cheap and bulk loans to large corporates but should such big people try to own banks, it is frowned upon. Customer service is an alien concept to Indian banks, public or private. Convenience to the public is least of their worries as the penetration of formal lending is quite less giving them a God like status. It is no wonder though that a parallel economy exists in India right under the nose of well-heeled bankers and regulators. They act as enablers to this system, fostering an economic activity that forms most of the financial transactions in the country. Indeed, India being a cash-oriented economy is largely due to indifference and lack sided attitude of banks. People prefer to keep cash at home than banks even though the gover

Extreme Reactions to the Demonetization of Currency Drive

So our Prime Minister told us all on Tuesday who the real boss in the country was. Let the UP wallahs and Tata walas debate on their own bosses. The country knows clearly who its boss is. The extreme reaction to his announcement is bewildering. You had shops opening way past midnight even of those branded companies whose CEOs tell you how concerned they are for the economy and bullshit. They opened over night to facilitate currency conversion to gold and other expensive items. And then there was the mad rush to ATMs. Within hours every ATM in the country was bled dry of its hundred rupees notes and other currency. As the PM announced that old currency will still work at Petrol Pumps, each pump was made bone dry as if cars were lurking around thirsty without petrol nd diesel. This coming from people who want their politics clean and neat. Who rant about at every forum how their government does nothing for them. I feel that the way situation was handled by the government was super