Indian Banking

Indian Banking system has changed considerably after early 1990s, with more and more Pvt Sector banks started operating in the country as per guidelines issued by RBI. Earlier the nationalised  banks were hardly offering any loans for housing and consumer durable and even if they were offering the interest rates were really very high and un affordable. Slowly all the banks started giving loans to their customers at affordable interest rates. presently the interest for housing loans varies from 8.25 to 8.50% and similarly  the interest rates for consumer durable also has come down. The lending rates to industry has also come down and still industry is demanding that the lending rates should be brought down further to boost the economy. Countrymen will be very happy if the economy grows, I have few points on this issue

1. My first question to all the concern will be -Is our Banking system and Political system is  so clean that further lowering of lending rates will not attract bogus industrialist to take loans with the help of politicians and accommodating bank officials. It is well known fact that with the help of bank officials how the industrialists and politicians converted their un accounted cash with new currency after demonitisation. Presently the Non Performing Assets against whom the banks have given finance are in the tunes of  Lakhs of Crores. The banking sector has failed miserably to collect the loan/interest amount from the defaulters, and some of the defaulters leave the country and to bring them back is a tedious judicial process.
2. My next question is the funds available with the banks are from the savings and fixed deposits of poor & middle class account holders, what they are getting in return from the bank is pittance. I remember about 15/20 years back  the fixed deposit in banks would fetch you interest up to 14% and now you can not get more than 7.25%. Imagine the plight of retired senior citizens who had invested all their savings in banks, they are finding it difficult to survive. The max interest rate offered to them is 7.5% to 7.75%, with the rising inflation most of them are finding tough to maintain themselves. Is RBI/Govt thinking about this problem?  It is the general public who are putting money in the banks, so that banks can lend money to commercial organisation.
3.  Now few days back RBI announced that account holders will have to pay for the few services which were not charged earlier, and these charges will also attract GST                                                                                a. CA/OD/CC accounts- free deposits up to Rs 25,000 per day and above that there will be charge of Rs 2.50 per 1000.                                     b.In the saving account- free deposits up to Rs 50,000 per day and after that there will be charge of Rs 2.50 per 1000.                                       c.For Internet/Mobile banking- There will be charge of Rs 25 per transaction. Imaging when PM Modi is promoting E payments, you have to pay for net/mobile banking.                                                                  d. Pin/Password change will be charged Rs 10.                                               e. Self cheque with drawl is limited up to Rs 50,000, after that Rs 10 per transaction.                                                                                                       f. In saving account you can deposit only Rs 200,000 cash per day.         g.Third party can withdraw only Rs 10,000 by cheque. It only means that if you want to withdraw money be self/bearer cheque, for with drawing more than Rs 10,000 you will have to personally go to bank.      h. If you want to have printed statement/or update your pass book, then you may have to pay certain charges to bank I do not know if there are many more guidelines/charges which are in the offing.
4. I do not understand why the personal account holders or depositors should pay for any charges for the services,with our money bank is doing business and earning profits, and if they are making losses it is because of their wrong actions or lending money under political pressures/ being soft on lenders which in the end leads to loss and Non Performing Assets(NPA).

In the end, my message to RBI is, Banks are not commercial organisation, where every services has to be billed. Please note that all these which are going to be charged are not services which bank is giving to its account holders and depositors, in fact that is the banking system, which is you give low  interest to depositors and charge high interest to their borrowers, and  the difference in the interest rates cover their establishment costs and profits. It is very surprising that with the bad policies of the previous regimes and bad recovery procedures followed by banks, the banking system has landed into such a mess,and for easy balancing of their losses , they have decided to levy the charges to their customers( Depositors and Borrowers).

I am not a finance man, so I have put my point of view in simple and plain language so that an ordinary person should understand , the RBI and Banking System is taking us for a ride,

What you say my friends.

Awaiting your comments and feed backs.