Banking a decade ago in India was a family thing where your father used to know the manager by name and the manager used to recognize him when he went to transact. It has indeed come a long way since then. Today’s banker remembers you by the number of zeros you have in your account and the credit cards and the loans. He will tell you about a 100 different ways to invest your money with him and spend quite a bit of it in the process.
What the banker or the bank doesn’t tell you is how they have adapted their ways for the 21st century in order to keep their new line of customers wedged to the credit cycle. These customers are addicted to brands and that makes them addicted to credit.
The bank knows that the students are the customers of the future and they go fly fishing for them right to the campus. They offer them credit cards at easy terms with high limits so that by the time they graduate and have a job, 15-20% of their salary goes towards their credit card bills. Over 120 universities in the US have cut deals with banks to issue credit cards on the basis of student ID cards. The universities usually make millions from these deals and also get a cut from the purchases made by the students.
In India, this is a newer phenomenon but rather than colleges, it takes center stage in BPOs and Call Centers where thousands of undergraduates line up as potential customers for the banks, on an average taking away Rs 15000 a month. For those travelling abroad and using a credit card, it can cost up to Rs 300 to withdraw Rs 9000 from a non-bank ATM. I called up “Sayak” who is a 23 year old Graduate working in a BPO in Kolkata for a telephonic interview. Sayak has been working for 2 years now and was offered a credit card by a leading bank in India about 18 months ago. Currently he has a debt on his card of more than Rs 54000 and has a credit limit of Rs 110000 on his card. He takes away around Rs 15000 a month and a major portion of it goes towards his card bill because that keeps his card active and him limit rolling. He admits that he would not be pay off the credit any time soon. His balance started from Rs 37000 but has become Rs 54000 with interest charges and late fees accruing.
Thats what you get when you mix irresponsible money management with freedom in the form of a credit vice. That is what the bank specializes in providing you------more often than not.
Currency in its physical form is as important as the concept of money itself. It provides you with an assurance of having something and a feeling of ownership. But the problem with paper is that it wears out soon. On average a paper currency notes stays for about 6 months in circulation. The solution lies in the form of plastic currency notes made from polymer which last up to 40 months and can be recycled easily. Australia already started issuing plastic bank notes in 1996 and it has produced plastic currency for Thailand, Indonesia, Papua New Guinea, Kuwait, Western Samoa, Singapore, Brunei, Sri Lanka and New Zealand.
