Banking solutions

A municipal council, presumably in UK, received a complaint that citizens were inconvenienced when a taxi stand had no taxi available. In a ...

A municipal council, presumably in UK, received a complaint that citizens were inconvenienced when a taxi stand had no taxi available. In a set-up like ours, it could have provided a political issue, with the Opposition stalling the proceedings of the council, demanding the commissioner8217;s explanation and mayor8217;s resignation and the fracas ending in a meeting deciding to set up an all-party committee to go into the issue.

After a study of the reasons behind a shortage of taxis, licensing policies, police harassment and so on, an elaborate report was delivered suggesting a rule that every stand should have a minimum of four or five taxis available at all hours failing which its licence should be quashed.

The council accepted this decision and took the easiest step first: 8216;8216;Every stand must have five taxis available at all hours8217;8217;. The poor city fathers had no idea that the said directive would add not to the availability but to the shortage of taxis in as much as it amounted to incapacitation of five vehicles at each stand by binding them not to move out when just five of them happened to be parked there.

This story was narrated to our class when principles of central banking were being discussed. The point at issue was the propriety of a higher reserve ratio being laid down for saving a bank in the event of a run on it. I was reminded of it the other day when in my bank I read a notice to the effect that every account holder must have a minimum balance of Rs 2,000 failing which a charge would be levied on him.

8216;8216;What will Nirmala do?8217;8217; the thought flashed in my mind. Nirmala is a working woman who had come with a request to fill up her withdrawal cheque for Rs 7000 while her passbook showed a balance of Rs 1400. Her answer to my question was that her salary was to be credited. 8216;8216;Why do I save?8217;8217; she may ask. 8216;8216;Am I to be penalised if I am not rich and need to use my own money?8217;8217;

Not very long ago, massive efforts were launched to spread the banking habit among the poorest sections of society. I appreciated the efforts of State Bank of Indore to promote doorstep deposits and self-help groups among toiling women. Dwindling interest rates have pushed people away from bank counters. Petty deposits which are being lured are likely to be just.

One hears the plea that the World Bank requires us to upgrade our banking and this is one of the steps on to zero interest and a charge instead of interest on saving bank deposits. American banks charge for cheque books and maintaining your accounts, we are told. OK, can be the response, first raise our per capita income to the American level. Is it to cover the banks8217; establishment costs? Of course, having the poor dears cost Rs 85,000 crore in financing dishonest tycoons? And they have to survive, haven8217;t they?