It is a fact that savers are treated very badly.It is unfair to expect
depositors to cross subsidise the bad borrowers, and the economy by
making use of their money for investments in Government securities
and bad borrowers who loot the banks.SB rate of interest remains at 4%
though it is more than a couple of years the Reserve Bank deregulated SB
interest. The FD interest is being brought down as and when the banks
get a chance. The present rate is less than 9% per annum when the
inflation is around 10%. Apart from difficulties of saving in these days
of spiraling inflation and other increased cost of living which include
high rents, high education costs, high transportation costs,high
medical expenses and miserable living conditions, people sacrifice and save
a little in banks for reasons for survival and other social aspects, but the
rates are discouraging and taxes have to be paid even on a small
interest amount exceeding Rs 10000. While dividends running into crores
of Rupees are exempted from taxes, the hard earned savings of people of
small means are not allowed to fetch a reasonable rate of return.Banks
also fail to come to the rescue of the economy and the people as they do
not want to bring down their luxurious expenditures and NIM. The base
rate at around 10% of most of the banks is questionable as they get
deposits at less than 6% on an average and they make advances at around 14% and above.
The whole system is playing mischief is a fact and savers suffer ultimately.. The Governance system and accountability are major
casualties in these days of free for all. Earlier some serious thinking
is given and action initiated, the position will move from bad to worse.The banks approach to business and the way they treat depositors need a thorough review before they get damaged beyond repair.
Dr.T.V.Gopalakrishnan
( This comment in a slightly modified form is in response to an article 'Time to treat savers fairly" that appeared in Business standard dated 16/7/2003). 
No comments:
Post a Comment