The picture of Indian Economy portrayed in Media be it News Papers, You Tube, New Channels on TV, Stock Market is all rosy, green and promising. But the underlying facts shows it to be shockingly different. My previous article published on 08th of Jun on this same blog shows how the Quarterly growth in the GDP of this country has been negative since the 2nd quarter of the 2016 calendar year. The GDP growth has actually been slowed down. Despite good monsoon last year the profit numbers of the most Indian companies are not as predicted by the stock market. Private sector investment is shrinking. Public sector undertakings need government support. Indian Banks have accumulated huge NPAs (i.e. Non Performing Assets) on their balance sheets. Credit growth in the economy has been slowed down. Interest rates are going down. In the latest RBI Monetary Policy announcement happened on 5th of June although RBI Monetary Policy Committee did not reduce the interest rate; it indicated that although RBI has paused the rate cut, it has not ruled out the option of cutting rates further. It is a clear sign that our Indian Economy has been slowed down and requires a boost from the central bank to keep it going further without causing many disruptions in the next two years of Modi Government. The BJP government cannot afford to expose the weakening economy with the elections not very far. Although it is very tough for any government to change the course of accelerated falling economy, Modi government tried to lift it to the height of prosperity. Undeniably Modi government did lift the pace of the economic growth to the height of prosperity, however the force of gravity has been acting stronger to pull the economy down more and more with every passing quarter.
Modi government did the best it could to save the Indian Banks, by bringing in more cash in to the banking system. However, the question one must ask to oneself and to the government is how it is going to use it further with the shrinking demand for the credit, and accumulated NPAs on the banks balance sheets. These Indian Banks follow so much documents and stricter norms while processing a loan request of a common man. The man, who is regular in paying taxes, working hard to earn the bread and butter for his family. Well, following the stricter norms while giving away any loan is not only mandatory but a social responsibility of the banks since they are lending the depositor’s money. Then one does not understand how these banks and the responsible banking personnel could be so negligent in granting business loans??? And be it because of demonetization or not the size of NPAs on banks’ balance sheet has been increasing. With the credit contraction in the economy and increased deposit base of the people Banks will have to bare more load on giving interest to depositors. With the past history in mind banks would try to build poor loan/assets portfolio to generate income. Of course, these activities in the slowing down economy is not worth taking a risk. That is what happened in Credit crisis in the USA in 2007-08. However, that credit bubble had started growing up long time before, i.e. since 1998-1999.
Modi government did the best it could to save the Indian Banks, by bringing in more cash in to the banking system. However, the question one must ask to oneself and to the government is how it is going to use it further with the shrinking demand for the credit, and accumulated NPAs on the banks balance sheets. These Indian Banks follow so much documents and stricter norms while processing a loan request of a common man. The man, who is regular in paying taxes, working hard to earn the bread and butter for his family. Well, following the stricter norms while giving away any loan is not only mandatory but a social responsibility of the banks since they are lending the depositor’s money. Then one does not understand how these banks and the responsible banking personnel could be so negligent in granting business loans??? And be it because of demonetization or not the size of NPAs on banks’ balance sheet has been increasing. With the credit contraction in the economy and increased deposit base of the people Banks will have to bare more load on giving interest to depositors. With the past history in mind banks would try to build poor loan/assets portfolio to generate income. Of course, these activities in the slowing down economy is not worth taking a risk. That is what happened in Credit crisis in the USA in 2007-08. However, that credit bubble had started growing up long time before, i.e. since 1998-1999.
Another strong reason I believe is in favor of me opening post-office account for most of my savings is first of all post-office does not give loan by itself like those corrupt bankers and definitely not to corporates. So first of all we would bring chances to minimum for our money being mis-applied for the benefit of few corrupt people in the society/ nation. Second, we are keeping our money close to the government where the chances of default are minimum to pay back our deposits anytime we need. And even if case by devil’s act (opposite to God’s act) the ruling Government can always print the money needed for the benefit of large public; like it does for any Public Sector Undertaking. Then it does not matter which party is ruling, be it BJP or Congress.
In such scenario, as a saving account holder I would like to open an account in the Indian Post Office Savings scheme, where the minimum required balance is Rs. 50/- only for an account without cheque book & with cheque book Rs. 500 i.e. very much less than the current limits prescribed by private banks as well as public banks. One would also get cheque book, ATM card and online banking facility.
Apart from Saving Accounts, Indian Post office provides many other financial services, especially to generate public’s saving which could be used by the government for the nation’s development activity. Also I feel it’s the most secured place in the country to safeguard one’s savings.
For more options about various Post Office saving schemes one may visit the following link.
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