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Monday, March 20, 2017

Money Donts with Kids

Money is always a sensitive subject especially with Kids. As parents we work very hard to give our kids the life we think they deserve. As the father of a 2 year old, Money is one subject I need to teach her to make sure she can take care of herself in this fast paced world. 

I have already written a couple of articles about Children & Money – more on the “Dos” or the things we must do. We haven’t touched upon the “Don’ts” so here we go…

1. We Cannot Afford to Buy That 

Imagine this, you are in a super-market or a Mall and are shopping for stuff. Your kid sees some nice but Pricey toy which he/she likes and is adamant about wanting it. What do you do? 

Some people say, Sorry, we cannot Afford it and try to reason with a kid. This may sound like a perfectly plausible discussion with a teenager but with a kid who isn’t even 10 years old? They may find it hard to understand why we are unable to afford a toy after seeing their parents buy many different items in the shops. You may argue that you just bought groceries and essentials for the home while a TOY isn’t an essential. Do you think a 6 or 7 year old understands that? 

Don’t use the phrase “We cannot Afford it” in front of kids until they are at least in their teens. Alternately, try something like this “You have many toys already my dear. If you want more toys you are going to have to start saving for it. Let me get you a Piggy bank and put some money on your behalf. Every time you save some money, Daddy (or Mummy) will also contribute. Once you have saved enough we can come back and buy this toy for you…” 

2. I spent a lot of money on this Gift of yours 

Have you ever seen the most popular toys in your kids play room? Kids don’t worry or care about the price of a Toy or a gift. It’s the gift that matters, not its price tag. A child that loves cakes would love it irrespective of whether you got a $100 gourmet cake or got it from a nearby baker for $5 or just baked it home all by yourself. Of course the gourmet cake would probably look and taste the best but for a child a cake is a cake. They don’t related items with money unless and until we drum this thought onto their heads. 

Putting a price tag on gifts can leave an indelible impression on your innocent little childs head. Don’t teach them the price of items, teach them the value of those very same items. Teach them that the value of a gift is not in the price tag, instead on the givers generosity and love. 

3. Your Uncle or Aunty owes me XX Rupees 

Talking about money especially in front of young children often might result in counterproductive results. Yes, you may be upset that your brother or sister or relative or someone has borrowed money from you and hasn’t returned it. If you make such statements in front of children, they will often result in them developing unwanted or uncomfortable feeling toward the person who owes you money. Yes, it is an admirable quality to be open & honest with your children and also teaching them about lending money to others but, that all must happen after they reach a certain age. 

For a child an uncle or aunt shouldn’t be associated with money and we shouldn’t be responsible for them building ill-will toward their relatives or cousins. 

4. Your Dad (or Mom) makes more money than I do (Or Only your Dad Makes Money) 

Talking about who is the Main or Bigger breadwinner in the family especially to a young child might confuse the child. As a parent, you don’t need to explain why only daddy goes to work (for a home where mommy is a home maker) or in a dual income household, why one of you makes more money than the other. For a child they should understand that it’s a joint effort between both mom and dad. 

5. I hate my Job. I go to work only for the Money 

Granted, you may really hate your job and are dragging yourself to work just so you can provide for your family. Your child doesn’t need to know this. Talking about such things especially hatred toward your job or your boss might reflect negatively on a child and scare them about their future. 
Keep your work stress & negativity off home and try to instil positive thoughts in your child’s mind. 

Some last words:

Kids are extremely impressionable and smart these days. They pick up things at the drop of a hat and as parents our actions leave a lasting impression on their minds and their lives. It is up to us to Lead by Example and teach them the value of life and money. 

If my daughter sees me lying or being a spend thrift and then I go about lecturing her about how important it is to be honest & truthful and to save money, do you think she would listen? 

What do you think? Are there other Donts you want to add to this list?

Tuesday, March 7, 2017

Are the New Banking Fees and Charges Justified?

For the past few days, social media in India has been buzzing with memes and posts about the new fees and charges that banks like SBI, ICICI, HDFC, Axis have introduced. Some were true while many were actually incorrect interpretations of the proposed fees so I had listed down all the changes in the previous article

That being said, as a customer everyone is left wondering whether Banks are justified charging customers like this. I am going to try to answer that question in this article. 

Are Banks Justified to Introduce these Charges?

No, Absolutely Not. Don’t worry, I will explain why I feel banks are Not Justified to introduce these charges. 

What is the Reason Banks Quote for these Charges? 

With the government’s attempt at pushing forward toward a digital economy, the Banks are claiming that these charges will deter customers from continuing to depend on cash and use digital means instead. 

Could this be True?

I don’t think so. The Governments attempt at pushing forward toward a digital economy so far has been through incentives, discounts and benefits to people who choose digital means instead of cash. By piggybacking on the governments digital push, banks have just used this as an excuse to make a quick buck at the expense of the customer. If the banks wanted customers to take up digital transactions, they too could have incentivized customers to switch to cashless payments; instead they have chosen to penalize the customer for using cash. 

Is this the only reason why I think this sudden introduction of fees is Unjustified? 

Again, No. There are a few other reasons. 

Reason 1: Insufficient Penetration of Banking Services in Rural India

Yes, the Government has taken an ambitious step and asked banks to penetrate rural areas of our country and provide banking services to the folk who haven’t seen a bank in their life. All this is well and good. But, even today a vast majority of our Indian population is living in parts of the country where an ATM or Bank Branch is not as easily accessible as a Metro City. “Cash Rules” in those parts of the country. 

Reason 2: Customer is already paying for Access to his/her Cash

Firstly, all Banks already have a certain minimum balance requirement for the different types of bank accounts they offer depending on the branch location. Private banks in Metro areas charge as much as 10,000 or more rupees as minimum balance for customers who want to open a savings account. For customers who fail to maintain this minimum balance there is a penalty which gets charged. (Yes, Almost all banks do this. Why SBI is in the news right now is because of the volume "which is approx 30 crore accounts", that would be impacted due to their change in minimum balance limits)

They also charge a fee to issue an ATM or Debit card to customers. Depending on the type of Account you have, whether it is in a City or Semi-urban area or a village, this fee ranges from around 100 rupees to even a thousand or more rupees for premium co-branded cards. 

On top of this, banks offset a certain % of the interest rate from the loans they disburse to cover for their operational costs and only offer the remaining % to the Deposit customers. 

So, customers collectively have already paid for access to their cash and hence this new fees being introduced cannot be justified even if banks claim that, they are doing this to offset operational costs. 

Reason 3: Other Countries don’t Charge Customers like this 

Yes, the developed economies use digital transactions extensively but they also use cash. Take USA or Singapore as example (I am taking two country’s that I have lived in so that the points I share are “FACTS” and not something I read on the Internet) 

Yes, Banks have a minimum balance requirement but, there are no restrictions on visiting branches or using ATM network. In fact, even issuance of the first time Debit/ATM card is FREE. When I visit the ATMs that are inside the bank branch premises, I usually see a good number of people who are in their 60s or more because people of that age usually have problems using technology and hence prefer to transact in person by visiting the branch. 

Reason 4: These charges WILL NOT help the Push Toward a Digital Economy

With the introduction of these charges, a customer in an Urban or Metro area could still do a little bit of planning and withdraw cash in lump sum once a week and continue to spend “CASH” instead of withdrawing in small amounts every 2-3 days. 

Reason 5: Inconvenience to Senior Citizens and Rural Population

Yes, there are a lot of ATMs in Metro Cities and Urban Areas but a good % of bank customers are Senior Citizens and aged people who will enter the senior citizen category in the next 5-10 years. People of that age still find using an ATM a challenge and prefer the old-school Visit the Bank to get or deposit cash approach. 

As a continuation to Reason 1, ATM networks have not yet penetrated many parts of Semi-urban and rural areas of our country. 

So, by introducing an upper limit on both ATM and Branch transactions to people who either don’t have access to an ATM or don’t know how to use an ATM, banks have basically made sure that their only option is to visit the branch and pay this fee to gain access to their money. 

This I feel is unfair. 

Some Last Words: 

As always with any new development in our country, we have two groups – one that blindly supports the government or anything that is citing the government’s new initiatives as a reason. On the other hand we have the other group that blindly opposes anything that is initiated by the Government. 

Even though Banks claim to have done this to help with the push toward Digitization, like I explained above, this doesn’t seem to be the main reason. As the regulator of Banks the Reserve Bank of India must intervene and make sure that banks don’t take the customers on a ride and charge them unfairly. RBI should put forth guidelines that prevent banks from arbitrarily charging customers without sufficient justification. 

What are your thoughts on this new fees introduced by banks? Do share them in the comments. 

Disclaimer: This IS NOT a Politically motivated Article. The views expressed in this article are the Authors personal views. The Author is not affiliated to any Political Party or Group in India. Abusive and Foul language comments WILL NOT be Published. 

List of New Fees and Charges Proposed by Banks in India

In the past week Social Media is abuzz with a ton of memes about the new fees and charges introduced by banks. While some are true many are also fake which are just intended to spread fear and create a sense of restlessness among the general public. As a Blogger it is my responsibility to help you understand what exactly are these changes or rather the new fees that you may get subjected to. 
The article is structured in such a way that you will find out all the new fees & charges introduced by every bank that has come out with a public announcement so far (as of this writing). 

Note: Existing charges that were already being charged are not covered in this article. Only the newly introduced fees are being listed down. Also, the fees mentioned below do not include the Service Tax which the bank will charge on top of the fee. So, if I say fees is Rs. X, read as Rs. X+service tax.


ICICI Bank has introduced the following NEW charges: 

1. Cash Handling Charges at Home City Branches – After the first four cash transactions at your home city branches, you will be charged a fee of Rs. 5 per Rs. 1000 or Rs. 150 (whichever is higher) on every cash transaction (Both Deposit & Withdrawal) 
2. You have one free cash withdrawal at non-home branches per month. For subsequent transactions a charge of Rs. 5 per Rs. 1000 or Rs. 150 (whichever is higher) will be charged
3. Cash deposit at non-home branches will be subject to a charge of Rs. 5 per Rs. 1000 or Rs. 150 (whichever is higher) 
4. The first Deposit made using a Cash deposit machine in the month is free while subsequent transactions will incur a charge of Rs. 5 per Rs. 1000 or Rs. 150 (whichever is higher)
5. Third Party cash transactions are capped at Rs. 50,000 per day 

Axis Bank

Axis Bank has introduced the following NEW charges: 

1. In your home branch, up to 5 transactions are free in a month with no limit of deposit or withdrawal. For very subsequent transaction there will be a charge of Rs. 2.50 per Rs. 1000 or Rs. 95 (whichever is higher)
2. In non-home branches, up to 5 transactions a month are free only up to a value of Rs. 50,000 per day of deposit or withdrawal. Beyond this limit, Rs. 2.50 per Rs. 1000 or Rs. 95 (whichever is higher) will be charged 
3. The first 5 ATM transactions are free in a month. After this, every subsequent transaction will incur a fee of Rs. 20

HDFC Bank 

HDFC Bank has introduced the following NEW charges: 

1. The first 4 cash transactions in a month are free. For every subsequent transaction there will be a charge of Rs. 150 (this includes both regular savings and salary accounts) 
2. Cash withdrawals at home branches will have an upper limit of Rs. 2 lakh per month per account. Above this limit there will be a transaction charge of Rs. 5 per Rs. 1000 or Rs. 150 (whichever is higher)
3. Cash withdrawals at non-home branches are free up to Rs. 25,000 per day. Above this limit there will be a transaction charge of Rs. 5 per Rs. 1000 or Rs. 150 (whichever is higher)
4. Senior Citizens and Children will not be charged any amount for such transactions

State Bank of India (SBI)

The largest bank in India SBI has actually come out with major changes which are:
1. All customers are expected to maintain a minimum balance depending on their location/branch. Metro cities – 5000, Urban areas – 3000, Semi-urban areas – 2000 and Rural areas -1000 is the minimum balance that customers have to maintain in their account to avoid penalty charges
2. The penalty charges for non-maintenance of account balance for Rural areas ranges between Rs. 20 to Rs. 50 and for Urban areas ranges from Rs. 50 to Rs. 100
3. Three cash deposit transactions are free per month for Savings account holders and every subsequent transaction will attract a fee of Rs. 50 
4. If cash withdrawal is done on other bank ATM’s, a charge of Rs. 20 will be levied from the 4th transaction onward. (If customer maintains a balance of Rs. 1 lakh or more, this fee for withdrawal on other bank ATMs is waived off) 
5. If cash withdrawal is done on SBI ATMs the first 5 transactions are free and subsequent transactions will attract of fee of Rs. 10 per transaction (If customer maintains a balance of Rs. 25,000 or more this fee for withdrawal from SBI ATMs is Waived off)
6. SBI will charge Rs. 15 for SMS alerts per quarter from debit card holders who maintain an account balance below Rs. 25,000
7. There will be no charges for UPI/USSD transactions of up to Rs. 1000 (UPI stands for Unified Payment Interface and USSD stands for Unstructured Supplementary Service Data – both are used for electronic payments)

Some Last words:

This article is only a NEWS type article which lists down all the charges. I will share my views on these charges in the next article…

Tuesday, February 7, 2017

Budget 2017: Impact of Increased Infrastructure Spending

Infrastructure sector is a key driver for the Indian economy. Infrastructure sector includes power, bridges, dams, roads, rural/urban infrastructure development and also Affordable Real Estate (Housing). As evident in the 2017 budget speech by our FinMin, this sector enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country.

In my previous broad review article, I had mentioned that this Infrastructure spending would be beneficial to our country and our economy but I did not get into details. So, here we go…

Just How Much got Allotted toward the Infrastructure Space in Budget 2017?

Total Allocation for Infrastructure in this year’s budget stands at a record 3,96,135 crores. This is significantly higher than what was allocated last year and like I said before, is expected to give a boost to our nation’s Infrastructure growth.

Effects of Increased Infrastructure Spending

You may be wondering, what the benefits of this Increased Spending would be. An Increased Road & Rail coverage network is just the tip of the iceberg. The Infrastructure Sector plays a vital role in the development of the country and this increased spending is going to have a wide range of benefits.

Better Global Recognition

In August 2016, India jumped 19 places in World Bank's Logistics Performance Index (LPI) 2016, to rank 35th amongst 160 countries. With this increased spending on the various segments of our Infra sector, we can be optimistic of further favourable jumps by India in this LPI for 2017.

Increased Job Creation Across the Country

When a country invests in improving its Infrastructure, it can help create both Direct and Indirect job opportunities in the areas where the projects are being executed. You need manpower to build whatever it is you are building like roads, railway lines etc which creates direct job opportunities for people. And these Infra projects are going to need raw materials which will result in indirect job creation in the corresponding manufacturing areas.

Housing for All by 2022 – A Key Driver in Job Creation

The Prime Minister recently made public the Government’s intention to build approx. 6 crore houses as part of two housing schemes: The Pradhan Mantri Gram Awas Yojana (for Rural areas ) and Pradhan Mantri Awas Yojana (for Urban areas). A paper jointly released by KPMG and NAREDCO (National Real Estate Development Council) suggested that with our increasing Urbanization, there may be a further shortfall of about 5 crore homes by 2022.

Apart from these Affordable Housing projects, the Government had indicated in 2016 that it is planning to build more than 100 Smart cities across the country which means, the growth of the Real Estate & construction side of our Economy is expected to be very strong. Rs. 23,000 crores has been set aside for the Pradhan Mantri Awas Yojana in this years Budget.

Experts predict that the Real Estate and Construction Sector is expected to generate about 7.5 crore jobs by 2022.

Improved Connectivity via Roads

Roads have been a focus area for the government to revive our Infrastructure sector. The Finance Minister mentioned that the construction of roads is progressing at a brisk pace of 133 KM per day. This year Rs. 19,000 crores have been set aside just for improvement of Rural roads as part of the Pradhan Mantri Gram Sadak Yojana. Rs. 67,000 crores have been set aside as part of National Highway Development in this budget.

With the upcoming projects lined up and the government expected to spend such astonishing amounts to improve road connectivity, the Roads Sector Alone is expected to generate approx. 50 lakh jobs across India by 2022. Not to mention the jobs that could potentially get created through the allied manufacturing sector that supports the laying of these roads.

Improved Rail Connectivity & Infrastructure

This year Railways received a budget allocation of 1.31 lakh crores of which Rs. 55,000 crore is coming from the Government. A Multitude of projects have been announced this year. They key highlights that would help boost job creation and our economy include the sanctioning of about 3500 kms of new railway lines. At least 25 new stations would be developed and 500 stations would be enhanced to support the differently abled by fitting elevators & escalators. 7000 stations have been identified to be fit with Solar Power and there is an ambitious target to fit Bio Toilets in all coaches by 2019.

Though the amounts aren’t as high as what Railways or Roads have received, the Government has set aside budget to modernize our Ports as well as to build new Airports in Tier II Cities.

Investing in Renewable Energy & Power Generation

Solar Energy has the potential to create huge job opportunities in India. The Installed capacity in Solar power generation has grown at about 151% CAGR in the last 4 years. Our capacity was a mere 35 MW in FY11 and has gone up to over 8700 MW in FY 17.

Last year, the Government set itself an ambitious plan of ramping up our Solar capacity to 100,000 MW by 2022. This year, 1.26 lakh crores have been set aside for Energy Production based investments across the country. This year’s target for Renewable Energy projects is 20,000 MW.
Furthermore, the Government has already set out an ambitious plan of ramping up this capacity to 100,000 MW of Solar capacity and 60,000 MW of Wind Energy by 2022 which will require an investment of about 5 lakh crores in the next 5 years. According to experts, this sector could generate about 10 lakh additional jobs by 2022 if the Government is able to work towards reaching this goal of 100 GW (gigawatt) of Solar energy and 60 GW of wind energy.

This Installation solar panels and wind turbines will also result in strong business opportunities and job creation for those equipment manufacturers in India.

A Positive Contribution toward the Indian GDP Growth

The Infrastructure Segment (Including Real Estate) is the third largest contributor to the Indian GDP. With this Increased Spending, we can expect our Indian GDP to get a strong contribution this year as well. With the government’s move to restrict all Cash Transactions above 3 lakhs, more and more real estate transactions are expected to come into the fold of the formal economy which again would contribute positively toward our Economy and Tax revenue.

What do you think about the Budget allocation toward the Infrastructure Sector and how it would benefit the nation? Sound off in the Comments section…

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