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My letter to the Honorable Finance Minister, Shri Arun Jaitley suggesting a ‘Janta Credit Card’ to eliminate black money

Date: January 27, 2015

Shri Arun Jaitley
The Honorable Finance Minister
Ministry of Finance
Department of Economic Affairs
North Block
New Delhi
110001

 

Respected Sir,

Sub: A ‘Janta Credit Card’ to eliminate black money from the economy

Your recent assurances that you plan to make the tax system more transparent and taxpayer-friendly are heartening. Your inviting people to send their suggestions ahead of the union budget also comes across as a very inclusive step.

I’m writing to you with a suggestion on how you can eliminate black money from the system by introducing a credit card for the people of our country. Right now, several banks offer unsecured credit cards to people and charge up to 36% per annum as interest when they provide credit to the account holder for purchases made using the credit card. These are usurious rates of interest especially when the same banks gladly lend money at 14-15% to the same account holder for buying a two-wheeler. We must have lower interest rates for borrowers with a good credit history, rated by CIBIL (Credit Information Bureau Limited).

It is in the interest of the nation to see that people have access to credit cards that offer credit at reasonable rates. When this happens, more and more people will own and habitually use credit cards. The boom in the US during the 1950s and 60s was driven by consumption. We can have a similar consumption-led boom here. This will also mean an expansion of production and economies of scale will result in a lower cost of production and generate employment. This will make our country more competitive in the international market. We will be better able to compete with Chinese goods within and outside our country. By encouraging credit cards at reasonable rates of interest, we may also be able to counter black money. Today a salaried person who has dinner out with his or her family often doesn’t leave with the restaurant’s bill. Restaurants often tear up or modify the bills to under-report sales. This causes losses of not only direct taxes but also indirect taxes such as VAT (Value added tax) and service tax. When credit cards are widely used, this malicious practice will be curtailed. The tax revenue generated will also indirectly help infrastructure growth.

The government, on its part, must consider offering a credit card; a ‘Janta Credit Card’ via the public sector banks such as The State Bank of India. These credit cards can be backed by a fixed deposit or a personal guarantee, making the risk of default minimal. The lending rate can be very close to the bank’s deposit rates. With this, the penetration of credit cards will increase exponentially. There are many small traders who deal only in cash and issue little worthless slips of paper as invoices and receipts. Greater usage of credit cards will make it very difficult for such small traders, small retailers and restaurants to conceal transactions and evade taxes, thereby sharply increasing the direct and indirect tax collections.

My best wishes for your union budget.

 

Best regards,

 

Vikkramm Chandirramani
CEO, Quest Mercury Intermedia Private Limited

Pictured above: Shri Arun Jaitley at the World Economic Forum’s India Economic Summit 2010 held in New Delhi, 14-16 November 2010

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Reserve Bank of India replies to my letter to the Honorable Prime Minister

Earlier this year in May, I had sent a letter to the Honorable Prime Minister Shri Narendra Modi ji, about the profiteering by Indian banks and had raised over 30 points in this regard. The Prime Minister’s Office turned my letter into a petition and sent me a reply, sending a copy to the Ministry of Finance, asking it to ‘take action as appropriate’. Today morning, I received a letter from the Reserve Bank of India (RBI), India’s central bank. This letter addresses each point raised in my letter. Here is the letter. It is heartening to see such agility on the part of the government in addressing the concerns and suggested changes in financial policies put forth by a citizen. RBI has addressed each point separately. I have summarized the reply towards the end of this post.

RBI letter

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It is apparent from their letter that the Ministry of Finance and the Reserve Bank of India have provided considerable autonomy to private banks to determine their service charges. While there are guidelines to make the bank charges fair for the customer, there is considerable latitude within these guidelines given to the banks. This, in my opinion, is being exploited by some players at the cost of the customer. This accounts for excessive charges in several areas. Net interest margin is also an area where a lot of freedom is given to banks. The letter from RBI states that ‘banks are not permitted to restort to any lending below the Base Rate’. It is ironic that the central bank has set a minimum rate below which banks cannot lend to us. At this point, there is no clarity to me personally about the maximum interest rate that banks can charge for lending. Many credit card companies run by banks seem to charge between 24% and 36% per annum while the average fixed deposit rate is 8-10% per annum for us.

The Reserve Bank of India cites some circulars in addressing my point about fixed deposit schemes being unfair to customers and bank charges, especially relating to pay orders being excessive. I had pointed out that some banks such as HDFC charge as much as Rs.15,000 for a pay order of Rs.50 lakhs when it is just a bank entry and it takes the same time to make a pay order for Rs.500 as it takes to make a pay order of Rs.50 lakhs. Circulars have been cited by RBI for inward remittance charges that I consider excessive and other concerns expressed in my letter.

I expressed the view that banks were overcharging for foreign currencies, keeping a large gap between the buying and selling rates of foreign currency. This has been forwarded to the Foreign Exchange Department, Central office for examination. I had pointed out that Real Time Gross Settlement (RTGS) charges were excessive and in some cases varied with the amount of money transacted. This has been forwarded to the Department of Payment and Settlment Systems, Central Office for examination.

I had urged the Prime Minister to back young entrepreneurs by giving them soft loans. This query has been forwarded to the Rural Planning and Credit Department, Central Office.

I had pointed out that it is very complicated to send funds overseas, for entrepreneurs and that sops to entrepreneurs for export of services shouldn’t involve too much red tape. These queries have been forwarded to the Foreign Exchange Department, Central Office for examination.

Some of the queries relating to raising capital in financial markets, excessive demat charges by banks, excessive stock brokerage by banks have been forwarded to the Securities and Exchange Board of India (SEBI).

Prime Minister’s Office Turns My Letter About Profiteering by Indian Banks into a Petition

Directs Ministry of Finance to take ‘action as appropriate’

The Prime Minister’s Office (PMO) has turned my letter to the Honorable Prime Minister Mr Narendra Modi into a petition and directed the Ministry of Finance to ‘take action as appropriate’. It is heartening to see the Prime Minister exhibit such an agile approach to fulfilling his economic vision of a prosperous India.

My letter dated May 26th, 2014 addressed to Shri Narendra Modi ji outlined several areas where banks in India are profiteering, contributing to higher inflation and making Indian industry uncompetitive. Banks charge excessive fees for making pay orders, RTGS (Real Time Gross Settlement), for foreign currency transactions and several other services. Many banks seem to even charge money for counting currency! I also stated in my letter that banks should be more forthcoming about lending to salaried individuals, who are often a better credit risk compared to large industrialists. Many powerful industrialists get loans using their political clout and eventually get them written off. There are several other areas including taxation, foreign exchange remittance, entrepreneurship and laws that work against the interest of small entrepreneurs that I mentioned in my letter. I also suggested that credit card interest rates must be brought down to a very reasonable level to encourage more inclusive usage of credit cards. This in turn would prevent tax evasion, especially in the restaurant industry. Wider credit card usage can also raise production, introduce economies of scale and make Indian industry more competitive.

This is the reply from the PMO received today.

A letter to Mr Narendra Modi, Prime Minister of India to prevent profiteering by Indian banks and make life easier for tax payers and entrepreneurs

This is a letter to Mr Narendra Modi, Honorable Prime Minister of India to prevent profiteering by Indian banks and make life easier for tax payers and entrepreneurs. There are 30 suggestions in all, which can reduce inflation, enhance the competitiveness of Indian industry, prevent tax evasion and enhance the quality of lives of millions of people.

Mr Narendra Modi
Prime Minister of India
7, Race Course Road
New Delhi

Date: Monday, May 26, 2014

Respected Honorable Prime Minister,

Sub: Profiteering by banks and encouragement of small business

Please accept my hearty congratulations on being elected as the Prime Minister of India.

Your economic vision for the country and your plans to leverage the strength of each state, to take the nation forward have impressed me greatly. The economic growth of Gujarat under your reign and your motto of inclusive growth have brought a renewed optimism about the country’s growth prospects even amongst some of the most cynical of us.

I’m writing to you specifically with some suggestions I have about encouraging small business in our country and about the profiteering by banks in our country. In the post-liberalization era many private banks have come up. However, banking being a heavily regulated sector there are a limited number of banks and this monopolistic situation is apparently being abused by many of These banks, most of whom have profit margins of over 70%. This in turn is hurting the competitiveness of Indian industry. Please allow me to elaborate on some areas of concerns.

1) Banks and pay orders

When a customer approaches a private bank to make a pay order, typically most private banks charge a fee based on the value of the pay order. If one wants a single pay order made of the value of Rs.50 lakhs, a bank fee of Rs.15,000 is quite common at some private banks. It takes as much time on the part of the bank to make a pay order of Rs.500 as it does to make a pay order of Rs.50 lakhs. There is no justification to charge such an exorbitant bank fee when the funds used belong to the customer and it will take a jumior employee barely five minutes to make the pay order.

2) fixed deposit schemes are unfair to customers

Bank fixed deposits are also structured to inconvenience customers and benefit banks. Sometimes customers have to break the entire fixed deposit when they only need a smaller quantum of funds. The other alternative is to have multiple fixed deposit receipts which is an inconvenience. There is also an option of availing overdraft against one’s own fixed deposit which is like paying to use one’s own money! In the age of computerization banks must be obligated to internally record funds in multiples of Rs.1,000. An account holder must be allowed to break a fixed deposit in part and be issued a fresh certificate for the reduced amount.

3) Banks overcharging for foreign currency

Banks also have a wide difference between the buying and selling rates of foreign currency. This practice needs to be curbed. Alternatively it should be possible for citizens to buy and sell foreign currency. There is no value addition in foreign currency trading. Why should people be charged arbitrary amounts?

4) RTGS charges are prohibitive

Many private banks have different rates for RTGS (Real time gross settlement) depending on the quantum of money being transferred. Again there is no justification for this. It doesn’t take longer to punch in a transfer entry of Rs.1 crore as compared to a transfer entry of Rs.3 lakhs. In many cases this is done via internet banking by the customer without staff intervention. If RTGS has to replace cheques it should be free or close to free.

5) Inward remittance charges

When a business person receives a remittance from outside India, banks charge fees based on the funds received. In developed countries like the United States, banks typically charge a flat fee. The fee charged should have no correlation with the funds received because banks do not add any value here.

6) Overcharging for sending text messages to customers

Banks charge as much as one rupee per text message or SMS sent to their customers. Their cost for each text message is as low as 1 paise. Till recently bulk SMS packages were available at this rate. Their price is a hundred times their cost!

7) Banks are charging money for counting currency.

Most banks even charge money for counting notes. Take Axis Bank for instance. A person who has a domestic savings account with them is charged money for more than 5 cash transactions in a month. From the sixth cash transaction in a month, an account holder has to pay Rs.2.50 on every Rs.1,000 deposited or withdrawn. This is subject to a minimum fee of Rs.95. Account holders are paying money everytime they withdraw or deposit money at Axis Bank. HDFC charges its regular savings bank account holders Rs.100 per cash transaction after the first five transactions in a month. Account holders are bring charged to withdraw they own money!

8) Sweep in and sweep out facilities are unfair to customers

Some banks offer a sweep-in-sweep-out facility wherein unused funds in savings accounts can be transferred to a fixed deposit account. For this, a bank like HDFC has a threshold of Rs.2 lakhs balance in the savings bank account. This is a loss to the account holder of thousands of rupees every year in interest income lost when it is only a computerized bank entry and banks can offer this facility at any threshold.

9) Demat wholesale jerseys China charges are excessive

When banks transfer shares to and from demat accounts, they charge a fee based on the value of the stocks. Why should it matter what the value of the stock is? Does it take longer to transfer 1000 ONGC shares than it does to transfer 10 ONGC shares? These are just bank entries and the bank does not bear any risk whatsoever. There must be flat fee or a reasonable upper cap on these charges.

10) Stock brokerage charges are excessive

For buying and selling stocks, banks charge as much as 0.50% for brokerage. These are all just computerized entries. No one has to go into a trading ring to strike trades any more. If the United States can have discount brokers, why should we be forced to pay through our nose for trading in stocks? There must be a flat fee or a reasonable upper cap on brokerage for stock trades.

11) Net Interest Margin

The difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders is called ‘Net Interest Margin’ (NIM). This can be as high as 4.1%, a massive spread enjoyed by banks such as HDFC which is seen as one of the most profitable, something their shareholders understandbly rejoice over. USA’s largest bank JPMorgan Chase & Co has a NIM of 2.37%. Indian banks continue to have a wide spread between the interest they pay depositors and the interest they charge from people who take loans.

12) Prepayment of loans and high penalties

Prepayment of loans is another area of concern. Banks often charge money when customers want to prepay loans, to recover the commissions they (the banks) have paid their DSAs (Direct Sales Associates) to get customers. This practice also needs to be done away with.

13) Lending to the salaried taxpayer

Banks insist on a lot of paperwork and documentation when they lend to salaried people. A salaried person is usually a much better credit risk and a very honest taxpayer. An average salaried person will be more worried about repaying a loan than the creditor will be about recovering it. An identity and income proof and a declaration that gives the bank to recovery from current and future employers should suffice. There are many instances where people, when refused by banks, have taken loans from private money lenders at over 300% interest and been driven to bankruptcy and suicide.

14) Credit cards can be used to increase growth

The credit card division of banks needs to be looked at very seriously. Most banks that issue credit cards charge anywhere between 24% and 36% per annum as interest on the funds lent. Most people are not financially very savvy and this sends them into a debt trap. There is no justification for charging 36% on credit card advances when a loan to buy a scooter can cheap jerseys China be given at 15%. Like in the developed countries, we must also have different and lower interest rates for people depending on their credit rating. We already have a credit rating body; CIBIL (Credit Information Bureau Limited). It is in the interest of the nation to see that people have access to credit cards that offer credit at reasonable rates. When this happens, more and more people will own and habitually use credit cards. The boom in the US during the 1950s and 60s was driven by consumption. We can have a similar consumption-led boom here. This will also mean an expansion of production and economies of scale will result in a lower cost of production. This will make our country more competitive in the international market. We will be better able to compete with Chinese goods within and outside our country. By encouraging credit cards at reasonable rates of interest, we may also be able to counter black money. Today a salaried person who has dinner out with his or her family often doesn’t leave with the restaurant’s bill. Restaurants often tear up or modify the bills to under-report sales. This causes losses of not only direct taxes but wholesale jersey also indirect taxes such as VAT (Value added tax) and service tax. When credit cards are widely used, this malicious practice will be curtailed. The tax revenue generated will also indirectly help infrastructure growth and result in lower our cost of production, thereby enhancing our competitiveness.

15) Big ticket loans to powerful industrialists

There is a perception that many large ticket loans are given by banks to powerful industrialists under political pressure and eventually written off. This needs to be countered.

16) Banks should back young entrepreneurs

There are many first generation entrepreneurs eager to start businesses but who do not have access to capital. There needs to be some way for banks to provide loans to enthusiastic entrepreneurs. Small business has the capability to generate employment directly and indirectly and needs state patronage and encouragement.

There is no benefit to the country to allow banks to indulge in this profiteering. If they pay taxes to the government, so do we. Any money we do not have to pay them, will eventually be taxed in our hands. Sir, banks in our country are contributing to inflation and getting in the way of the competitiveness of Indian industry. I urge you to do something to make them partners in nation building rather than our adversaries.

There are also several areas where the government can help small business survive and thrive. Small business can generate a lot of employment directly and indirectly. Right now, as it stands, SME (Small and medium enterprises) and micro enterprises are burdened by a huge amount of red tape. SMEs employ close to 40% of India’s workforce, but contribute only 17% to GDP. With government support, SMEs can be more efficient, generate employment, improve the growth rate and contribute tax revenue.

17) Indirect taxes and TDS (Tax deduction and source)

In case of VAT (Value added tax), service tax and tax deducted at source, all taxpayers are required to file quarterly or half yearly returns. Tax payments need to be made every month. This places a massive compliance burden on taxpayers. Businesses with a turnover of less than Rs.1 crore per annum should be allowed to file annual returns for all taxes. There are many small entrepreneurs who choose not to scale up their business to avoid the red tape.

18) Sending funds overseas

In developed countries like the United States, there are very few formalities for sending a wire transfer. In our country, since the last few years, we have to fill out too many forms, get Form 15CB from the chartered accountant, file Form 15CA etc to send a wire transfer of even a small amount. This causes considerable inconvenience to small entrepreneurs.

19) Setting off business losses against salaried income must be allowed

As per the income tax act, it is not possible to set off salaried income against business losses. This is very unfair to the salaried taxpayers who aspire to turn entrepreneurs. Even if a salaried person starves and loses most of his income in a new business, he or she is expected to pay tax on the salary. On the other hand a business person who ventures into a new business can set off losses from one business against profits from another business. This anomaly needs to be fixed.

20) Tax on share premium needs to go

A large part of our export revenue in information technology is from call centres and business process outsourcing (BPOs). Many of these enterprises, while precious generators of foreign exchamge do not offer much by way of value addition. As a result, they have very little pricing power and are vulnerable to fluctuations in the foreign exchange rate. We need to encourage entrepreneurship in areas of product development where there can be pricing power. New ventures need capital and the government must make it easier for first generation entrepreneurs to raise risk capital. The UPA II government introduced a tax on share premium, when share capital is subscribed to, in private companies. After pressure from the private equity and venture capital industry, certain groups of people such as designated angel investors were exempt from this. There is no reason for the government to come in the way of people willing to invest their own money in backing new ventures. An investor who uses the enterprise, skill or genius of the founder may buy shares at a premium and this should be perfectly acceptable. Currently share premium needs to be justified to tax authorities and reports of valuers are required. This bureaucratic discretion needs to be done away with and a clear policy favoring entrepreneurs is greatly needed.

21) Crowdfunding and raising capital

In the United States, there are websites like Kickstarter that have come up and led to many unusual creative ventures in science, engineering and the creative arts. There are some crowdfunding websites that have come up in India. We need to have a policy in place to encourage crowdfunding. The wisdom of the masses can result in backing for new and path-breaking products and innovations.

22) Income tax department

The Income tax department and its approach needs a revamp. A large number of tax cases end up in court, clogging the system and wasting the time of the average SME entrepreneur. The biggest litigant in Indian courts is the Indian government. Among these the biggest litigant is the Income Tax department. When the government picks a fight with so many tax payers, they are not only wasting resources of the courts but directly harming the industry by taking away the time that could have been spent managing and scaling up production. The government and the citizens need to be partners in growth, not adversaries.

23) Single window setup and shut down of companies

To encourage entrepreneurship, we need to make it easier for entrepreneurs to start companies in India. We also need to make it easier for them to shut down their business if their plans don’t work out. Indian is at the 134th position on the World Bank’s ranking on the ease of ‘Doing Business’ for 2014. Singapore, Hong Kong, New Zealand and USA make up the top four and we need to emulate their processes. Entrepreneurs would greatly welcome a single window system for setting up a company, apply for PAN, TAN, Service tax and VAT numbers. The compliance burden for filing audited returns needs to be toned down for smaller companies. Similarly, shutting down companies needs to be made easier. In India, 1,92,000 companies had stopped filing returns with the Registrar of Companies as on July 31, 2010. In July 2013, the UPA government launched a scheme to give amnesty to over 12,00,000 service tax assesses who had stopped filing service tax returns. Given that there are so many defaulters, the government must consider reexamining its systems and policies instead of hounding taxpayers. Penalties have been increase manifold by the registrar of companies in recent years. These should be brought back to realistic levels.

24) Tax laws

Tax laws that affect the common taxpayer and the small businessman need to be easier to understand. The Income tax act and the direct tax code should be simple enough for any adult to understand. Instead we have a system which drives people to chartered accountants and eventually encourages litigation. Bureaucratic discretion in income tax needs to be minimized to prevent harassment of tax payers and ensure easier compliance.

25) Export of services and foreign exchange

Export of services can be a major driver of revenue in India. There are some schemes such as the ‘Served from India’ scheme which exist for service exporters. However, due to the red tape involved, very few have utilized the benefits of these schemes. Net foreign exchange earning businesses should have it easier when they want to avail of duty scrips to import capital goods. There are many aspects of tax such as service tax by reverse charge and tax deduction at source when making overseas payments which hinder export of services.

26) Reduction of taxes

In the last ten years, we have seen a considerable increase in taxes. Service tax was levied at 5% from 1994 to May 2003. Then it was raised to 8%. Today it is 12.36%. Service tax was levied on only three services initially. Today it is levied on almost all services. The system of CENVAT credit is very cryptic and not everyone uses it. This means that service tax is paid at every level, contributing to inflation. Income tax exemption slabs have not kept pace with inflation and are far too low especially for city dwellers. There need to be special exemptions for those living in cities who pay high rent and food costs or an overall rationalization of direct taxes. Less than 3% of our country pays income tax. If the government needs additional revenue, it would be more fruitful and fair to plug leaks in the system and widen the tax net than go after the existing tax payers.

27) Raising capital in financial markets

We need to have a way for companies seeking funds for expansion to be able to tap financial markets by coming out with initial public offers while still being accountable to the investors. As of today there are close to 1300 delisted companies on the Bombay Stock Exchange (BSE) alone. This is thousands of crores of wealth that has gone from small investors to unscrupulous promoters. This money could have been invested in legitimate companies and helped in nation building. BSE has an arbitrary and opaque policy about delisting companies and investors are never sure about which companies are at risk of delisting. This results in small companies being ignored by investors. If this is corrected, smaller companies will get a more fair valuation and be better equipped to raise capital when they want to expand.

28) Internet reach, speed and standards

India’s internet penetration continues to be low in India. Internet tariffs although much lower than the early days continue to be prohibitively high. We need internet to be cheaper than water for the common man. The resulting efficiency, cost saving, competitiveness and innovation from it will make it more than worthwhile. New Delhi is all set to be India’s first Wi-fi zone. This is a welcome development. We could have Wi-fi in all the major cities in India. It doesn’t have to be free as long as it is affordable. This will also be useful to tourists.

29) Shared working spaces

To encourage entrepreneurship especially in industries such as the internet industry, the government can consider setting up shared working spaces for startup entrepreneurs. Such spaces usually have furniture, computers, broadband connectivity, conference rooms, mail handling arrangements and also support personnel available on freelance basis. These facilities will help entrepreneurs run their respective startups by paying reasonable rents and without having to rent large offices. This will also nurture a community of entrepreneurs who can interact and collaborate with each other. This synergy can result in new and innovative companies that can match the likes of Google, Facebook and Twitter emerging from India.

30) Encouraging creativity and protecting creative freedom

A significant percentage of India’s export revenue in information technology comes from process-driven work such as call centers handling support and marketing calls. These are very price sensitive segments because they are all left brained efforts that will eventually be automated. Work in creative fields being right brained cannot be easily automated and needs to be encouraged. This includes the fine arts, drama, music, writing, product design, psychology and many others. A creative approach over an extreme utilitarian approach needs to be encouraged in society. Authors, filmmakers, writers, artists etc need to be given creative freedom and innovation in the creative arts needs to be supported. Many creative projects including books and independent films don’t see the light of the day because of monopolistic situations in the marketplace. There is a need for government support to ensure independent films do get a release, encourage good cinema without restricting creative freedom. Movies have been taxed heavily and this places a great burden on the consumer. This requires reconsideration and change.

31) Helping students from Non-English medium schools make the transition

There are millions of students who complete their school education in a medium of instruction other than English. When they get admitted to colleges, most struggle with their studies and sometimes even the most brilliant among them drop out before they have been able to complete their graduation. There needs to be a way to acclimatize these students with English as a medium of instruction so they can have equal opportunities eventually at the workplace. This can be done by starting a government owned or supported chain of classes to teach English or via E-learning programs. This will help provide equal and fair opportunities to people while also reducing personnel costs for industry.

32) Government websites

Government websites need to be overhauled to make them easy to navigate, aesthetic and reliable with uptime. This will help us get information from them when we need it. It is common for government websites to be targeted by hackers and for them to crash when under pressure, for instances websites of universities when results are declared. In the age of cloud computing, this can be countered by making some changes.

Sir, thank you for taking the time to read this letter. I have full faith in your leadership and conviction in your vision of a prosperous India. I hope you will set this right.

Yours truly,

 

Vikkramm Chandirramani
CEO, Quest Mercury Intermedia Private Limited

Here’s how to apply or modify your voter’s ID card in India

You can apply for and modify your Voter ID card online. There is no need to line up at the local office for this. There is an online, paperless Justice alternative.

Here’s what you need to do:

Go to

http://eci-citizenservices.nic.in/Default.aspxWatch Full Movie Online Streaming Online and Download

Click on ‘New user registration’

Enter in your cellphone customers? number and email address. You’ll get an authentication code on your phone. Подсветка You need to enter this in.

You’ll be asked for the older information including name, address, constituency etc as well as the newer information that you would like to submit.

You’ll also be asked to upload a scanned passport size image and scanned documents to establish your age and residence.

At some point during the www.chicagobearsjerseyspop.com application life you’ll be asked for the ‘Part number’ and ‘Serial number’ for your application,

To look this up visit this URL

http://eci.nic.in/eci_main1/Linkto_electo_search.aspx

Choose Electoral Roll >> Link to voter search

You can search by name and constituency HEAD and your record will show up. This record will include the ‘part to number’ and ‘serial number’.

After you have entered in all the information within your application at eci.nic.in, you’ll be able to review it before you submit it. You Own can also print it out for reviewing it. I suggest you print it out to go over everything. Once you finalize and submit it, you won’t be able to change it.

That’s A?va about it. It would take anyone less than twenty minutes to complete this process.

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Will India’s gas pricing lead to a recession?

The Indian government has doubled the price for gas, turning a relatively cheap fuel into an expensive one, overnight. This price change will kick in from 2014 but there is considerable cause for worry over this harakiri by the United Progressive Alliance (UPA) government. This revision of gas prices is being billed as part of the ‘reforms’ process and a section of corporate India is upbeat. The reality is very different. It may send the economy haywire and leave a mess for the next government.

Raising the gas price will lead to an increase fuel and power costs across the board. Companies that use gas to power their plants, will have to pay much more for it. This will lead to an increase in their production cost, which in turn will destroy their competitiveness in the local and the overseas market. China continues to flood the Indian market with their inexpensively produced goods in every industry including electrical and electronics, mechanical and metallurgical products, chemicals, glass and ceramics-based products.

In the export market too, Indian companies find it an uphill task to compete with Chinese manufacturers because of the higher production
cost in India. The higher cost is due to several factors including corruption, poor infrastructure, fuel costs, compliance costs etc. Raising the gas bill will only damage this competitiveness further. Reduced profitability may lead to layoffs and harm employment generation in such industries. This in turn can reduce discretionary purchasing power in the hands of the people due to pay cuts and job losses. The price of foodgrains and other commodities will move up because transportation costs will increase. Transportation costs are a significant component in case of many commodities especially foodgrains. All around inflation will increase and further reduce purchasing power.

One factor that stands out here is that the price the government will pay has been determined while the price the consumers will pay has yet
to be determined. This is being played up the government but it means little. The government will have to pick from either charging the entire sum to the consumer or subsidizing it. If Are the government does away with subsidies, the gas and fuel prices will increase the price of everything leading to all
around inflation. If they choose to subsidize it, the subsidy will have to come out of the tax collections, which the citizens will pay. The government may
have to raise taxes so that they can afford to pay the increased tax bill. So, not only are jobs and profits of the corporates on the line but an increase in direct and indirect taxes is almost certain.

In any case, the economy will be affected. Subsidies do not usually make sense because they take money Jersey away directly. Had there been no subsidies, the citizens would have some more purchasing power left which they would have used their discretion to spend. Subsidies can be useful only if they are used to ensure equitable distribution of wealth, transferring wealth from those who have the most to those who need it the most. This rarely happens especially in India where there are too many leaks in the system.

Another factor is that the price of gas has been fixed in dollars while the amounts collected from the consumers will be in rupees. The government will either have to hedge its position given the huge foreign exchange risk or, more likely, bear the risk. If the dollar goes up it will increase the liability. Agreeing to a dollar rate especially when dealing with Indian gas producers like Reliance Industries seems unnecessary.

Since the gas prices will harm the economy and increase the production cost of local industries, making them less competitive, we can expect exports to be affected. If exports reduce, the deficit will widen because India will be exporting less and importing more. The dollar will move up against the rupee. This in turn will increase our liability for gas in rupee terms. That will further harm our local purchasing power and industry.

So, we are heading down a slippery slope here.

To take care of the fiscal deficit, the government hopes to sell stakes in some public sector units (PSUs). There are two flaws here. One is that the stock market is unlikely to remain buoyant if the economy starts going downhill. The other is that this is similar to selling your house furniture and car to pay your monthly credit card bill. The response to these PSU sales have been much below expectations over the past couple of years. Several stock offerings from PSUs such as ONGC and SAIL have had to be postponed due to poor market conditions. When they have come out with offers for sale, the pricing has been much lower than the government would have liked.

India’s external debt has balooned over the years. It is now $390 billion dollars in 2013, up from about $100 billion in 2004. That’s close to a four fold increase in nine years and compounded growth of over 16.5% every year. The short term debt payable is $172 billion up from $54 billion in 2008. India
has to pay back $172 billion to foreign investors by 2014.

That the confidence of foreign instituitional investors in the Indian economy is flagging is shown by the heavy selling in debt all oflast month. There was such heavy selling in Indian government’s bonds that trading had to be halted due to the decline in a single session crossing a threshold. Indian bonds
had dipped after the US Fed unveiled its policy.

The stock market has been falling consistently. The BSE sensex and the NSE Nifty 50 are held up only by some of the component companies of
the respective indexes. Small cap and mid cap stocks have declined across the board. Investors have been shying away from stocks with most having seen a negative or no return since 2008 on their investments while interest rates have been at a high indicating a higher opportunity cost. Initial public
offers by companies have resulted in stocks trading at one tenth of the issue price post-listing in many cases. There are allegations of serious financial mismanagement and fraud by companies raising public money. This has led to Securties and Exchange Board of India (SEBI) launching investigations in many cases. Bombay Stock Exchange (BSE) has introduced periodic call auction system at the behest of SEBI which has led to volumes drying up in the counters of smaller companies. Such a situation affects the capital raising ability of companies and their expansion plans, something that is very detrimental because small and coming medium enterprises create a lot of employment. There are more than one million engineers this year in India who will have no jobs largely because the SME sector remains ignored.

Standard and Poor, the international rating agency recently reiterated their negative rating on India. This is one level above ‘junk’ If the rating is revised down to junk, it will worsen India’s situation as debt will be harder and more expensive. It will also send the rupee further down as many investors will exit India.

A lot of Indian politicians have been too busy battling scams and corruption scandals to manage the economy effectively. As a result, India’s GDP growth has been declining. A lot needs to be done to get India back on the growth track. Corruption remains one of India’s biggest troubles. Due to a corrupt system, the amounts spent on infrastructure and development are disproportionately high as compared to the final outcome, expanding the deficit considerably. The gas pricing policy needs to be relooked at. The SME sector has to be stimulated with special incentives for export oriented companies and the companies that will be able to compete with China. Compliance costs and red tape have to be reduced. Smaller companies should have an easier environment to raise equity or debt in. Without these measures being taken, a recession is imminent.

Are banks in India making too much money from their customers?

Have you ever seen the branch of a bank in India, any bank, barring the ones that go bust, shutting down? I’m not talking about moving but shutting down for good because of lack of business? Even some of the most inefficient government owned banks have had their branches multiplying like rabbits. You see them putting out ads looking for office space on long lease, shops for ATMs and flats for their employees even when the rest of the country worries about a recession kicking in. All of this is because banking is an insanely profitable business.

Here are sales and profit figures of some of the major private banks in India (Data courtesy Capital Market magazine).  See the operating profit margins ranging between 62% of HDFC bank and going to as high as 81% of Karur Vysya Bank.

Private Sector banks

Public Sector banks

If you think public sector banks are less expensive, here’s a little something for you to see. The most profitable public sector banks, Vijaya Bank and Canara bank have profit margins of over 80%! Even on the lower end of this scale, no bank in this list has an operating profit margin of less than 68%. That is over two rupees out of every three rupees you pay them is operating profit for them!

You can see more financials of public sector banks and private sector banks at moneycontrol.

Banks in India seem to charge money for everything, sometimes I think even for the air you breathe in their branches. There is rarely anything free despite the promises you get. If something is free, it’s usually coming out of the interest free deposit you keep in your account with them. Foreign banks are even more expensive to pretty deal with. Many foreign banks require a high minimum balance which is not-interest bearing. In return for the notional interest on this deposit, you get some services that are ‘free’. Standard Chartered is one such bank where you need at least a million rupees to open a EBP 1000 current account. That’s about Rs.80,000 in notional annual interest.

There’s no reason for banking to be so expensive in India. Banking is a commodity business. There is zero value addition in this business. A bank takes money at a certain interest rate and only gives it at an a higher interest rate to another person, making money from the spread. If you’re an account holder, it doesn’t matter if you get a loan from ICICI bank or from HDFC bank. It’s still as useful. You could be paying Rs.500 to a barber for a haircut despite having another next door who would do it for Rs.100 because these in an element of skill here for which you pay. No one in their right mind would turn down a loan at 12% from one bank to take another at 13% from another bank, if there are no other hidden costs. There’s little or no value addition in banking in India. Scale doesn’t matter either. You wouldn’t care if you’re dealing with a small bank or a large bank when you take a loan. This should make it a price sensitive ‘commodity’ business quite like iron, steel, sugar, vegetable oil where traders deal with thin profit margins because they are adding no value, just buying from one and selling to another. What prevents banking from being so is that in India banking is heavily regulated by the government. It’s almost impossible for new private banks to get licenses from the Indian government though a new policy is underway. Meanwhile the existing ones continue to overprice their services and suck the consumer dry. In a developed country like the US this would have called for a class action suit against all the banks. Here people are forced to grin and bear it because class action suits are unheard of.

Here’s one example. When you get a demand draft (DD) made from your bank, one of their employees prepares it, enters the information in the bank’s computerised wholesale jerseys network and gives the instrument to you. This takes less than 10 minutes of time of the employee cheap jerseys who could be drawing a salary of say Rs.20,000 a month. You give the DD to someone as payment and that person deposits it into their bank account. It gets processed like a cheque would. Now here’s what it costs to get a DD made at HDFC bank if you have a regular savings account with them:

Upto Rs. 10,000     Rs. 50
Above Rs.10,000 & upto Rs. 50,000     Rs. 75
Above Rs. 50,000 & upto Rs. 1 Lakh     Rs. 2.50 per 1000 or part thereof (Min Rs. 150)
Above Rs. 1 Lakh     Rs. 2 per 1000 or part thereof (Max Rs 10,000/-)

If you plan to buy a property for an amount of Rs.75 lakhs in Mumbai and have to pay via DD, you would pay Rs.250 for upto Rs.1 lakh and then Rs.200 per lakh with a maximum of Rs.10,000. This means you’ll hit the cap and pay Rs.10,000 for a single demand draft. Order two such demand drafts in a month and you have effectively paid for the salary of the person making the demand drafts out for you though he or she probably spent less than 20 minutes doing it. Of course, your bank will ask you to use Real Time Gross Settlement (RTGS) which is certainly relatively ‘cheaper’ to you but a huge revenue earner for the banks. HDFC’s fee for Outward RTGS is Rs.25 for amounts between Rs.2,00,000 and Rs.5,00,000 and Rs.50 for above that. Why should HDFC, or any bank for that matter, be allowed to charge a fee based on the amount of the transaction? It’s a bank entry. That’s all. Debit Mr Ram, Credit Mr Shyam. End of story. It’s all computerized. The internal cost of these transactions is very low and banks like HDFC continue to charge as much as as they can get away with for it. This is as true for most other banks as it is for HDFC bank. SBI has similar charges for RTGS transactions.

Various small and large businesses in India continue to get stuck with these huge bank charges, raising their cost of production. They do pay less for each DD if of they maintain an interest free average balance but ultimately it is us, the consumers who get stuck with the bill as they factor these costs of notional interest on those deposits into the products and services they sell. This contributes to inflation. What can be the justification for charging fees based on the amount of the demand draft from someone who has a regular savings account? Does it take longer to prepare a demand draft worth Rs.75 lakhs as compared to a demand draft for Rs.500? Does it take more time to process an RTGS transaction of over Rs.5,00,000 than of a lower amount? Why should banks cheap nfl jerseys be allowed to set a percentage of the amount as their bank fee, especially since you are using your own funds and not using an overdraft or availing of a loan? The internal cost is the same irrespective of the amount.

Most banks require an average balance to be maintained depending on the type of account you have. There are ‘no-frills accounts’ (mandated by Indian law) which don’t require a minimum balance but have very limited features and are almost useless for the average salaried person. For other accounts, the average balance required can be anywhere between Rs.1,000 to millions of rupees depending on the ‘free’ services available with wholesale nfl jerseys that account. Businesses which have a current account are required to be keep this amount in their current account and as you probably are aware, current accounts are non-interest bearing. Keep a rupee or a crore in your current account, you won’t get anything by way of interest. Now this ‘minimum balance’ is calculated on a daily basis by most banks. So you could have Rs.1,000 one day and Rs.50,000 the next in your account, the bank averages the balance everyday at the end of the month. If this average is below the threshold, you have to bear ‘minimum balance charges’. Where this becomes unfair to the account holder is that any given time there is no way for you to know what has been your average daily balance so far, during the month. So you could see Rs.1,00,000 lying in your account on the 25th of the month and feel comfortable you are way above the threshold of Rs.10,000. Yet if your balance has been very low earlier in the month, you’ll end up having to fork out minimum balance charges. In the interest of fairness, you should be able to see at any given time when you log into the internet banking interface what your average daily balance has been so far for that month. You should also be told exactly how much you would need to keep in your account for the rest of the month to meet the average balance requirement. Banks must inform account holders via text messages about this. Till this is implemented, charging account holders for going below the minimum balance is being unfair to them. Also, minimum balance charges are ridiculously high at most banks. If you are required to maintain a minimum balance of Rs.10,000 and the balance drops by Rs.100 because the bank issued you a cheap nfl jerseys cheque book, you could get stuck with bank charges of Rs.1,000 if you have a Vyapaar current account with SBI. Never mind that they could have just charged you for an interest on the deficit of Rs.100, to make it fairer.

SBI, like all other banks, continues to charge fees as a percentage of the amount it handles, in case of foreign exchange transactions whether handling remittances or collection of bills. This is very unlike the international practice of charging a flat fee in case of wire transfers.

Here’s a site where you can confirm that US banks typically charge a flat fee for wire transfers. It offers a comparison across the major US banks. Once again, when businesses in India have to bear these expenses for making payments, whether they are importing furniture or apparel, it is the consumer who bears the brunt. This adds to inflation. Even when it comes to fixed deposits, banks like HDFC bank are giving account holders a raw deal. HDFC gives an account holder the option of transferring funds from their SB account to a fixed deposit account automatically beyond a threshold. This, on the face of it, is useful because fixed deposit accounts pay more interest than an SB a/c. Where it starts going wrong is that HDFC insists that this can only be done for amounts beyond Rs.2,50,000. Never mind that your minimum balance is, as per your account’s description, expected to be Rs.10,000. This means you are effectively giving them an interest free deposit of Rs.2,40,000, a potential interest loss of about Rs.20,000 a year. Should you be expected to pay Rs.20,000 a year for the simple facility of automatically transferring excess funds from your SB A/c to a fixed deposit account? This should happen automatically and you should be able to set the threshold anywhere at or above Rs.10,000. Yet, this practice continues. With most banks including HDFC, you can’t break a fixed deposit in part. You have to break the entire fixed deposit. They usually suggest you split your FD into multiple certificates at the outset if you anticipate needing the funds before the FDs have matured. In the age of computerization, this seems silly. Why can’t they split the fixed deposit into units at their end, internally? If you deposit Rs.1,00,000 they should be able to create a hundred units of Rs.1,000 each. If you want to withdrawn Rs.5,000, the rest should remain untouched and not be subject to the premature withdrawal penalty. IndusInd Bank has such a facility of transferring funds into a FD beyond a threshold that you set, which means it is possible. Why can’t HDFC have it? Of course, most banks would be more than happy to extend an overdraft on your FD at 1% higher than your FD interest rate but effectively this means that you pay money to use your own money!

Did I mention that HDFC is one of the most profitable banks in India going by the CASA ratio?

CASA’ ratio is the current account and savings account ratio. Funds in current accounts generate no interest income for the account holders while funds in savings bank accounts generate very little interest income. This gives the bank a ‘float’ of money at a low interest rate which it can then use. Part of these funds are used to give loans for business, cars, real estate etc at much higher interest rates. Not all of it can be used because these funds can be withdrawn by account holders at any time. So a large part of these funds can be used to generate income. This is a simplification and the more elaborate version of this could explain how this is even more lucrative.

The difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders is called ‘Net Interest Margin’ (NIM). This economic can be as high as 4%, a massive spread enjoyed by banks such as HDFC which is seen as one of the most profitable, something the shareholders understandbly rejoice over. Here is a comparison of NIM across global banks. HDFC had a NIM of 4.2%. This is more than three times as much as BNP, France and over five times as much as Mizuho Financial, Japan.

Banks that are into providing stock trading services have turned those businesses into cash cows with their service charges. Stock brokerage is again, a business with near zero value addition. They may provide you with access to financial reports and results data but most of that is already in the public domain. When you sell a stock, typically, it has to be transferred from your demat account into the demat account of the buyer. This is one computerized entry at your end and another at the buyer’s end with some charges by the stock exchange involved. Again, like the demand draft instance, there is no justfication for charging an amount based on the value of the stocks. It could be a penny stock trading for Re.1 or a stock selling for over Rs.1000 per share. What does it matter? The time taken to enter the transaction is the same. Morever, in these times, with everything being online, I doubt anyone has to physically enter in the information. Banks typically mark up the stock exchange fees when levying these charges.

Here are the charges from ICICI bank.

Let’s say, you sell stocks worth Rs.10,00,000. You’ll have to pay 0.04% as ‘instructions fee’. This amounts to Rs.400. It’s ten times as much if the stocks are worth Rs.1 crore because the cap is as high as Rs.25,000! If someone hits the cap, they could pay Rs.25,000 for a minute’s work of an ICICI employee, assuming someone still does this manually in this electronic age and effectively paid his or her monthly salary. It’s quite like charging someone more money to park a Mercedes than a Honda City. Why should it matter how expensive the car is? It uses the same resources when you park it.

SMS alerts from banks are also overpriced. Till the Telecom Regulatory Authority of India (TRAI) came down heavily on SMS spammers, it was possible to send text messages in bulk for barely 1 paisa each and thousands (1) of telemarketeers were doing it. HDFC Bank charges you between Rs.60 and Rs.100 a year for sending you SMS alerts. If you have a 100 transactions a year, it should be possible to send you the alerts for less than Rs.5. This is a cash cow in the making for the banks. Out of HDFC Bank’s 26 million account holders, 1.2 million use mobile banking, and this is increasing by 30% every quarter. So this can potentially get them between Rs.100 crores and Rs.260 crores when everyone has been signed up. A lot of this would be profit given that the cost of sending text messages is so little. Moreover, it is a well accepted fact that below a certain threshold most people don’t bother to call the bank to dispute the charges. How much time would Government you be willing to give to call your bank to dispute Rs.60 a year? It’s probably just not worth your time but it’s a gold mine for the banks that levy the fee with little or no protest from account holders.

The average account holder would be shocked to know that most banks even charge money for counting notes. Take Axis Bank for instance. If you have a domestic savings account with them, you’ll be charged money for more than 5 cash transactions in a month. From the sixth cash transaction in a month, you’ll have to pay Rs.2.50 on every Rs.1,000 that you deposit or withdraw. This is subject to a minimum fee of Rs.95. You’re paying money everytime you withdraw or deposit money at Axis Bank. HDFC charges its regular savings bank account holders Rs.100 per cash transaction after the first five transactions in a month. Account holders are bring charged to withdraw they own money. What could be worse?

Credit card divisions of banks also generate a lot of cash for the companies at the cost of credit card holders. Some years back there were several news stories about the debt collection agencies retained by some banks using strong arm methods to recover credit card receivables from credit card account holders. Google for your bank’s name with ‘credit card’ and ‘harassment’ as keywords to read about cases. After RBI came down on such banks, banks such as ICICI and SBI started reducing the number of credit cards issued and took huge write-offs.

Finally, to put it in perspective, here’s where you can read that HDFC bank had a ‘fee based income’ of more than Rs.50,000 crores in FY13 while SBI had a ‘fee based income’ of over 11,000 crores in FY13. The article shows some concern because apparently the figures are below expectations!

Prepayment of loans is another area where banks seem to decide their own rules. Prepayment of auto and home loans can cost anywhere upto 5% of the loan amount. This is to make up for the fat commissions that banks give to direct sales associates (DSAs). There are several industries in India which are allowed to make only regulated profits, with only a specified rate of return on their investment. Power and fertilizer companies are an example. Banks are the backbone of the economy. The Indian government continues to speak of inclusive banking and has been unable to control inflation.  Banks need to be convinced to give account holders a fair deal. This profiteering must be prevented in the interest of containing inflation and reviving economic growth.