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Understanding the effect of rolling back petrol prices
While Petrol prices seem to be running astray, what one must understand is that causing “Bharat Bandh” and other protests and eventually rolling back prices may not help the situation.
For example, India sells 100 units of produce at Rs 1000. This means as long as India spends Rs 1000, it can recover it by selling 100 units. At this stage, the economy is balanced. Now, let’s say India sells a liter of petrol at Rs 50 instead of Rs 75 (its true value) thus making a loss of Rs 25 per liter. To compensate for this Rs 25 loss, India will either borrow Rs 25 or print currency of Rs 25.Whatever be the case, for the additional Rs 25, India does not produce any goods. The number of units continues to remain at 100. In the absence of any real production, India will recover the Rs 25 from its citizens by spreading the loss across the 100 units.
So, the system had 100 units and was sold at Rs 1000. However, due to the loss, an additional Rs 25 (borrowed money or printed currency) was added into the system. So while the units remained 100, the money in the system became 1025. While the price per unit in the previous situation was 1000/100 = Rs 10, now the price per unit would become 1025/100 = Rs 10.25. This is how the recovery takes place across all the units. In other words, the value of the rupee goes down because the same number of units is now purchased at a higher amount.
A very similar thing is happening in India. People are spending more than they are producing. This is causing fiscal deficit or a gap between what we spend and what we earn. So naturally, the value of money is eroding in the economy as explained in the earlier example. India does not produce enough petrol and therefore imports because petrol is an essential commodity. As shown in our earlier example, the increase in petrol prices is not being passed on to the end consumer. Had the increase been passed on to the consumer, the system might have self regulated itself by way of the consumer and reducing the consumption because of higher prices.
Since the price rise does not get fully passed on, the demand for petrol remains unabated and India has to import more quantity of petrol. This naturally leads to more paper money (or borrowing) in the economy without a commensurate increase of real goods in the economy. This means that the price of goods in the economy increases to offset the loss of petrol sales. Thus, instead of fewer people paying for the increase in the price of petrol, now they pay by way of higher prices of goods. This is what is commonly called inflation. So in essence, by rolling back prices, the people at large may not benefit as they are hit by inflation which erodes the value of their money.
Hope this note gives you an idea on the effect of rolling back petrol prices.
Banking goes hi-tech
- Devendra Mohan*
*
By implementing core banking technologies, banks are now
offering multi-channel banking facilities. Read on to know more…*
Last year, HDFC Bank and Movida, a joint venture between Visa and Monitise, launched a mobile payment service allowing customers to pay their bills through their mobile phones using their debit and credit cards registered with the bank. Similarly, Axis Bank too has launched a mobile phone based card acceptance service using regular mobile phone handsets, which is attached with specially designed card readers as card acceptance devices fitted with technology called Swipeon.
According to Rahul Bhagat, head of HDFC Bank’s Retail Liabilities and Direct Banking Channels, the bank has over 5.6 million credit cards and over 14 million debit cards. “The mobile service encourages customers to use their cards more,” he thinks.
Jairam Shridharan, head of Consumer Lending & Payments, Axis Bank, thinks that if India has to become a cashless economy, there has to be an instrument to transact with small establishments, home delivery and cash on delivery agents, taxis and autos are able to accept card payments.
Last year’s BW-PwC best bank survey showed that many of the new generation banks have been spending up to 15 per cent on technology. “This is expected to go up to 20 per cent or even more in the private sector banks,” said a Public Sector Bank official, who preferred to remain unnamed.
According to a study by Frost & Sullivan, the spending on technology will increase at 14.2 per cent annually. “Induction of technology has benefited banks as there is increase in volumes of business and transactions with lesser manpower leading to reduction in operational costs,” says a senior executive with an upcoming private sector bank. This has also led to standardisation in the quality of services, leading to increased efficiency and competitive spirit.
Also, the increased use of technology in back office processing, convergence of delivery channels as well as IT enable business processes reengineering has changed the very core of banking. Banks now need less incremental capital to expand their network.
However, one of the most salient feature of core banking is collating customer information to enable banks to offer customised services to customers. But all Indian banks have not been able to do so.
Digital Innovations: Another significant technological achievement is digital innovations which will be instrumental in defining customer’s continued relationship with a bank offering him a choice to remain there or go to another bank. Globally, it has already started making inroads into the banking system lending customer a tool-especially in the Gen Y category. In India, this age group will be in the 18-35 years which will decide on its primary relationship with a bank. “Banks will have to perforce attract customers and keep devising new digital strategies which would necessitate looking beyond cost reduction,” says Edgar De La Marr, an independent banking analyst from London.
Power of Social Media: “Banks need to evolve social media strategies,” says a bank analyst. Banks such as ICICI, HDC, IDBI etc are already active on Facebook, Twitter etc. In fact, IDBI Bank has already started showing its concern for social engagement. Mobile banking, which is still in its infancy in India, will start delivering a whole range of services the cost of which will be as much as Internet banking. Mobile banking along with social media will become a formidable force. Globally, by 2015 the mobile transactions will touch $500 billion. Even in India the next two years will see engagement of some $340 million.
Cloud Computing – a digital innovation will change banking cost efficiencies. It responds quickly to customer requirements with very little incremental investment as Cloud is available on demand. A year ago, Yes Bank initiated its cloud computing exercise with a plan to shift its entire data centre to a cloud centre. According to Umesh Jain, CIO of Yes Bank, cloud computing’s biggest advantage is for SMEs that it allows them to utilise the best of the breed technology that is being used by large enterprises at an affordable cost.
Credit/Debit Cards: How to use your card effectively
- S Mayura*
Credit and debit cards have replaced cash and have only benefited in making life easy especially with day to day activities like paying mobile
or electricity bills etc through online transactions. S Mayura reports
Actual story begins here: Buying a gadget, paying insurance premium and paying your electricity bill has one thing in common – All of them can be easily done through your credit card. Its sibling— debit card—does almost the same. Here are some tips to use them effectively:
Choose the right card: Rajiv Raj, cofounder of CreditVidya explains “There are factors such as interest rate (APR), reward points, finance charges, credit limits, grace period etc which defer from bank to bank. So it is necessary that you do proper research on them before you finalise your card.” Credit cards come in two forms – reward cards and cash back cards. A reward card is one that gives you points on each purchase and a cash back card is one that offers you cash discounts on bills payable. If you are dining out in upmarket restaurants frequently, you should go with reward cards that offer you high rewards points for spending at ‘fine-dine’ facilities. Pankaj Maalde, head, financial planning at apnapaisa.com maintains, “One also needs to check for the joining fees or maintenance charge if any and compare the rates. Most of the vendors wave off the maintenance charges but you will have to see that it should not get billed to you afterwards.”
Spend wise: Debit cards directly pay from your bank account. So there is nothing to worry about, as you cannot spend beyond your ability to repay. But you have to be a bit careful with your credit cards. You have to repay your bills on the due date prescribed by credit card issuing bank. Hence it is better to spend within your means. Credit card is a facility and not a ticket to bankruptcy.
Repay right: Typically a credit card offers the card holder to pay his bills in 30 to 52 days. You have to pay by the stipulated due date and failing which, there is a penalty for non-payment. Maalde further says, “If you pay within the due date then you need not pay any interest. Otherwise one has to bear the high interest burden which is between 36 per cent and 42 per cent per annum.” Some individuals opt to pay minimum amount due, however it does not save you from payment of interest. As you miss your credit card repayments, your CIBIL credit score also goes down, dampening your credit profile. To ensure that you pay on time, you may choose to keep a standing instruction for fund transfer on due date from your bank account to your credit card issuing bank.
Maintain secrecy: While swiping your debit and credit card at a merchant outlet, do it in your presence. Do not share your ‘Online Transaction Authentication Code’ with others. Update your mobile number and email id in bank’s records. This ensures that you get transaction alerts on time, and fraudulent transactions can be pointed out immediately.
Protection: Some banks offer life insurance to the card holders to the extent of outstanding amount, for a premium. Opt for such a plan. It helps to repay the bill outstanding, in case of an eventuality. Also there are card protection plans that can be availed. In case of loss of cards due to theft or otherwise, you can protect yourself from the loss arising out of unauthorised use of cards. Credit cards used to your advantage can be both money and time saver, and further offer convenience to transact seamlessly throughout the world.
informative post:-}
sahith wrote:
informative post:-}
bhai sach sach batana.. poora padha kya 
PENGUIN TIWARI wrote:sahith wrote:
informative post:-}
bhai sach sach batana.. poora padha kya
THAT INCLUDES
Spend wise
BETTER WE ADD
Follow DD as one more point to the writer.
Germany needs skilled workers from India: German Ambassador
The Young Leader Challenge: Changing job before appraisals
Indians upbeat about US proposal to grant more green cards to science & maths graduates
Why Tamil Nadu is the most daunting liquor market in India
Tech giants, Apple and Samsung, frenemies for life
Trade unions oppose EPFO’s move to make Aadhaar mandatory for members
evrything gonna be conned to UID,,nthin can escape..
@B@R_0_0_D wrote:@
Why Tamil Nadu is the most daunting liquor market in India
http://economictimes.indiatimes.com/news/news-b…
article said TN biggest market for liquor…till nw i ws thinkin it was kerala
Currency the latest threat to global economy
Love at work, Cupid is turning out to be a bug for HR departments
Word-of-mouth cuisines: Recipes that exist only in small communities
What makes Indians so good at research and strategy?
High skilled immigration bill introduced in US Congress
Mauritius offers zero customs duty regime for Indian companies setting up shop in the island nation
Bring your personality into your workspace
Why world’s diamond polishing hub Surat has never seen Brussels-type heist
Wanted: An executive assistant for Mukesh Ambani from IIM-B
Indian approach to business not goal-based; it is gaze-based
Hero MotoCorp’s workers, management struggle to find middle ground
Counterpoint : Plug Black Money First
Ravi Subramanian
The Economic Times
The sting of the cobra, which sent banks scurrying for anti-venom serum, struck the banking industry with a force never felt before. Cobrapost’s expose on Thursday chose to brand the entire banking industry as one that is full of “banksters” (bankers plus gangsters). It would have us believe that banks are full of shameless, incompetent employees whose first thought every morning is: how are we going to launder money. They come across as employees who don’t have a conscience but are willing to make con a science.
I too write stories set in the banking industry. I wrote about the dark underbelly of branch banking, KYC compromises, cash transactions, money laundering, all woven into a thriller titled The Bankster. But even in a book with that name, there were good bankers and bad bankers, the former helping the bank tide over the problems and issues it faces because of the latter.
Unlike my books, the Cobrapost sting is nothing but an attempt at defaming private banks and a poor attempt at sensationalism. And all the news channels were willing accomplices and played along. As a banker myself, I feel the urge to stand up in defence of my colleagues, and present a viewpoint that everyone who has seen the Cobrapost expose must know.
Firstly the banking regulator, the Reserve Bank of India (RBI), is the frontier banking regulator in the whole world. No other regulator is as proactive, as market focused and as effective as the RBI. It has done enough and is constantly on the ball as far as money laundering is concerned. Remember wherever there are rules, there will be people trying to circumvent them. The RBI has always remained ahead of the latter and must be lauded for it.
Secondly the banking industry is one of the largest employers of talent in this country. And the bulk of that talent is sitting at the entry level — relationship managers, customer service executives, wealth managers, insurance salesmen and loan managers, amongst others. Foreign and private sector banks have adequate processes to train employees, and controls to ensure they behave in a compliant manner. Despite this, a few black sheep could possibly infiltrate the ranks. Show me one industry where 100% of employees follow all the rules. It’s not the occurrences of frauds/manipulations, but how the bank reacts to such instances that differentiate a good bank from a bad bank. Most banks that I know of have a zero tolerance for frauds.
It is against this background that I would love to know the universe on which the sting operation was conducted. In how many cases did the attempt to sting prove futile? The three banks in question have over 7,500 branches across the country, with over 75,000 frontline employees, which makes the number of employees exposed by the sting, a minuscule proportion — less than 0.05% of the frontline employee base. If I include the affiliates and insurance companies, this decimal would be pushed one point to the left. Come on guys; get real. In a country where most politicians reserve the right to be corrupt, do we really believe that Arvind Kejriwal’s demand for the resignation of the finance minister, sacking of the bank CEOs and withdrawal of their licences on the basis of this sting is justified?
And lastly, an important point that almost everyone missed in the high-decibel news channel debates on Thursday was the genesis of the problem — a parallel cash economy. Fix that first. Money laundering will cease to be an issue. Fix the UID project first. Money laundering will automatically come down.
(The writer is the author ‘If God Was a Banker’ and ‘The Bankster’)
barood ping me in gtalk
Venkat wrote:
barood ping me in gtalk
Bhai apki Gadi 39 milestone par ruk gai hai…
(sorry just saw ur msg.. Good night, & thanks for help)
Venkat wrote:
barood ping me in gtalk
Personal talk lol
donreturns wrote:Venkat wrote:
barood ping me in gtalk
Personal talk lol
Any problem ?
You can also join, provided ….. u returns !
Trends: Customised Services is The New Mantra
Devendra Mohan
Competition, product innovation, better risk management systems, and new technology is now emerging as the trendsetter in banking, reports Devendra Mohan
There has been a sea-change in services of major commercial banks with introduction of considerable innovation and diversification, especially with the launch of consumer credit, credit cards, merchant banking etc. There has been an increase in the demand of retail credit, ATMs and debit-cards. The introduction of new technology by banks is now emerging as a trendsetter as far as banking services is concerned.
IT-Spurred Trends
Real Time Gross Settlement (RTGS): This system, works on real time basis. It was introduced in India in March 2004. Through this instructions can be given electronically by banks to transfer funds from their account to another bank. It is maintained and operated by the RBI.
Electronic Funds Transfer (EFT): EFT is a system whereby anyone who wants to make payment to another person/company etc. can approach his bank and make cash payment or give instructions/authorisation to transfer funds directly from his own account to the bank account of the receiver/beneficiary.
Electronic Clearing Service (ECS): ECS is a retail payment system being used to make bulk payments/receipts of a similar nature especially where each individual payment is of a repetitive nature and of relatively smaller amount. This facility is meant for companies and government departments to make/receive large volumes of payments. Automatic Teller Machine (ATM): In the recent times ATMs have become immensely popular device in India, which enables the customers to withdraw their money 24X 7. The device allows customer with an ATM card to do routine banking transactions.
Electronic Payment Services (e-cheques): A new technology is being developed in the US for launching of e-cheque, which will eventually replace the conventional paper cheque. India has already agreed to the introduction of e-cheque and the Negotiable Instruments Act has already been amended to include Truncated cheque and E-cheque instruments.
Point of Sale Terminal: It is a computer terminal linked online to the computerised customer information files in a bank and magnetically encoded plastic transaction card that identifies the customer to the computer.
Tele Banking: It allows the customer to do entire non-cash related banking on telephone. With this facility, Automatic Voice Recorder is used for simpler queries and transactions. For complicated queries and transactions, manned phone terminals are used.
Electronic Data Interchange (EDI): EDI is the electronic exchange of business documents like purchase order, invoices, shipping notices, receiving advices etc. in a standard, computer processed, universally accepted format between trading partners. EDI can also be used to transmit financial information and payments in electronic form.
Old Challenges, New Remedies
A number of Indian banks are burdened with non-performing assets (NPAs). As a result they would be subjected to tremendous pressures to perform or else perish to perform. In such a scenario, Information Technology (IT) has come as a great help.
It not only ensures smooth interrelated transactions over the electronic medium but also makes complex financial product innovation and product development easier. Through the application of IT and e-banking, the banking system is now heading towards virtual banking. There is already so much talk about e-banking through World Wide Banking (WWB) which would facilitate the linking of all banks globally. As a result, there will be no individual banks, no need to have physical bank branches and no extension counters. Customers would be operating their bank accounts through internet from their homes and offices.
That would be the day when the banks would be inside your premises, serving as never before.