PNB does not get it!

I have a current account with PNB (Punjab National Bank) at Mira Road. Today I went to the bank to request a new cheque book for this account as I had run out of cheque leaves.

The bank asked me to submit the requisition form from the old cheque book. It also asked me to write the complete mailing address at the reverse of the requisition slip along with my phone number.(How stupid of them, they already have all these details on their record. What if I had mentioned a different address? Would they have sent me the cheque book at that address?)

Then the lady at the counter told me that I will soon get an SMS and an alert about the impeding arrival of my new cheque book.

And that the cheque book will arrive in 10 DAYS!

When I remarked that earlier one could get the cheque book the same day, she told me the bank is now computerized and cheque books are processed and dispatched centrally.

Whereas the whole world is going for de-centralization, PNB just does not get it and is going in the reverse direction.

When I got slightly upset, the lady got more upset than me and directed me to speak to her manager!

Fat good that was going to do anyway!

ICICI increases Home Loan rates

While RBI pumped 1000 Crores of liquidity into the banking system to prevent credit squeeze in the market, ICICI bank has quitely increased rates on home loans by 1% for old and new customers.

RBI's actions should have resulted in decrease in interest rates as key bank rates have been lowered to increase liquidity in the banking system. In effect banks have more money to lend now than before the rate cuts.

Some banks have lowered their home loan rates for loans less than 30 Lacs by 0.5%.

The question is Why is ICICI raising rates in a market where rates are headed in the other direction?

The answers (all speculations) could be;

ICICI wants to deliberately become less competitive thus pushing new customers to other banks in an environment where risks have increased due to imminent fall in real estate prices.

ICICI wants existing customers to close down their home loan accounts with them. This will serve multiple purposes.
One, it will make the bank earn money in foreclosure charges.

Second, the bank will get back it's money which is now at risk.

Third, falling property prices (estimated fall of 30 to 40%) will not hurt it's balance sheet in the mark-to-market norm of accounting.

All along ICICI bank has been saying that they are very liquid and people have no reason to fear of any problem. It's actions seem to suggest otherwise.

You be the judge.

Stock markets tank

Stock markets all over the world have been falling. Investors (speculators) who were participating on the stock markets have booked huge losses or are sitting on equity that has little or no value.

How did this come about?

Mindless lending in US to the housing market created a housing bubble. Property prices rose as bankers and mortgage lenders offered money to just about anyone to buy a house. People with little or no capital bought houses (sub-prime borrowers) with the sole intention of selling them when the prices rose. Banks and Mortgage lenders lent money with holidays on principal payment and deferred payment plans. While the prices were rising, everyone made money.

Then suddenly prices stopped rising and payment holidays ended. People who had no income and no prospect of selling the house to the next fool walked away from them. Banks were left holding the property as most of the loans were no-recourse loans. With more people selling, property prices collapsed having a domino effect of all markets. Banks that had lent money were forced to book losses under the 'Mark to Market' accounting standards. Capital erosion was the order of the day and rating agencies down graded credit papers issued by investment banks and other banks thus reducing them to junk status.

Banks had no option but to raise money when none was available. Confidence has hit rock bottom and trust has got thrown out of the window. Banks stopped lending to each other as no one knew when the other party would collapse. In a concerted and coordinated manner Central banks pumped billions of dollars directly into banks, partially nationalizing them but to no avail.

Stock markets were hit because sellers could not find any buyers at any price. As need for money (liquid cash) increased markets had only one way to go, down.

Stock markets never reflect the true state of a company's health. In fear markets go down and in exuberance markets go up. On the way up any good news is magnified and on the way down even the smallest of bad news is magnified ten times.

Experts predict a 12 to 18 month period for the markets to remain in the grip of bears.

With the BSE Sensitive Index tanking below 10000 points yesterday, Indian investors, day traders, speculators have lost more than 50% of the value of their investment from the peak of 21,000 points touched in January 2008.

According to experts there is more to follow.

In such times if one wants to invest is stocks, one should look for companies with robust business models and Price to Earning ratios of 6 to 8. Otherwise it is safer to place your money in Fixed Deposit with some nationalized bank where you will be assured of both, Return of Capital and Return on Capital.

Living on borrowed time

If you had access to money at 2% interest per annum what would you do?

Borrow as much as is possible and enjoy your life to the maximum. Buy stuff that you don’t require and spend on cars, holidays, parties and purchases.

You would buy all the things that you always wanted to buy and hope to pay off the loan over a period of time. As you were a US citizen, you would be sure to enjoy the highest standard of life while being sure that you would have a steady job that would allow you to pay off the loans that you had taken. You would live beyond your means.

The world would salute you as a consumer from a nation that makes the factories of the world run. The world would lend you its own money to sustain your consumption and spoil you for choice. You would not have to bother about saving any money as countries across the continents would be lending you their savings in the hope that you buy from their factories. When you want some more money, your bank would support you by in turn borrowing from the Federal Reserve. The Federal Reserve would just print the dollars that the banks needed to lend to you. The banks would in effect live much beyond their means too.

And to prop your habits of living beyond your means, the Government would float another scheme of printing more dollars. 700 Billion to be exact to start with and keep printing till your life was restored to the same level of comfort that you always enjoyed.

And one day the countries that were lending to you would realize that all the dollars that your government gave for purchasing the commodities from them were worth nothing but just pieces of paper that said ‘In God We Trust’. Your government would then never be able to prop up its own currency as even God would not have any trust in the paper that was printed by the Federal Reserve.

Is this the situation that you want to be in?

The young generation will shout Why the Bloody Hell not! Who has seen tomorrow anyway?

But the laws of economics have a strange way of catching up. When supply increases, demand increases. When supply of money increases, prices increase. Goods and services become expensive. There is unmitigated inflation. Bread costs millions and prices change by the hour. You see paper that is not backed by any asset has no value.

Do you see this scene repeating in India?

Well all the indicators point to such a scene replaying in India. Supply of money has increased by leaps and bounds. RBI along with the Government of India is doing the very same thing that US did; why not copy the model that is so successful at raising standards of living eh?

Property prices have increased by 300 to 400%. Commodity prices are on an upward march as are the salaries. But are savings also increasing?

Government of India is happy with the advance tax that it is collecting. It fails to realize that tax is being paid from the increased money supply that has hit the markets.

Till such time that people wake up to the problem, we are all living on borrowed time.

Bad Karma catching up with MNC and Private Banks

A news report today in leading newspapers in Mumbai talks about CitiBank planning to sell its swank headquarters in BKC.

It is a typical case of bad karma catching up with the bank.

For years, Citibank and similar foreign and private banks lobbied with the mandarins in the law making institutions to offer products and services whose cost was way prohibitive for the common man.

They set up honey traps by offering easy credit through credit cards, personal unsecured loans and other such instruments where the interest rates were portrayed to be unregulated by the central bank. They charged interest in the region of 35 to 85% all in the name of unsecured credit.

These bank employed bright kids fresh off the MBA mill to sell these products and services. These kids were offered heavy salaries and pushed into achieving sales targets for the bank’s dubious products. To recover the small loans issued to masses, these banks hired dubious agencies purely on commission basis thus transferring the cost of their entire operation on the poor borrower.

Stories of mental, physical and financial harassment abound. Bank managers and officials ruthlessly went around first distributing money and then recovering these small loans.

Small borrowers, people who borrow 40,000 to 50,000 rupees (1000 to 1250 US Dollar) could be easily browbeaten into submission. Armed with a central bank looking the other way and legislators not bothered about the rape of the common man, these banks systematically looted the common man. Many were driven to commit suicide, many marriages went bad and many people’s families were destroyed.

All this has created a lot of ill will amongst the people and it is now translating to these very same banks facing collapse for deeds done by the managers who were supposed to make the bank grow. The sub-prime crisis in United States and its fall out on the world financial system is having its echo here in India too. These banks are now left holding the baby.

Soon these bank managers who were getting fancy salaries and perks will be also laid off. Banks like CitiBank will have no option but to cut all the flab. With share prices of the bank falling to 16$ from a high of 65$, it has already seen an erosion of 75% of its value. There is more to come from where all this came from and boy am I happy!

It is the bank’s bad karma that is catching up with them.

How ABN Amro and Other Foreign Banks including Indian Private Banks cheat customers

When you take a personal loan from any Foreign or Indian Private Bank including ICICI, HDFC, Kotak Mahindra, please be sure of the fact that they have decided to cheat you right at the very outset itself.

When you take a loan, you are given a cheque which is normally dated for the second or the third week of the month. By the time the money is in your account, it is the end of the month.

And as per agreement executed by you, the bank is now ready to take back the first installment. This is where the cheating happens.

First, the bank does not give you the full amount of the loan, deducting the processing charges at source along with the service tax and all other levies.

Secondly, the bank takes back the first installment in the first week of the month that follows the disbursal date. Therefore in effect you are paying back the bank interest on the entire amount within 7 to 10 days of getting the loan.

This is a standard sharp practice deployed by all the banks other than nationalized banks.

With nationalized banks you may face a delay but they will never cheat you. Do you know why? Because promotions in Nationalized banks are not linked to returns generated by an individual. Whereas in MNC and Private Indian Banks, fresh MBA's are hell bent on increasing the profit of the bank in the hope that they will be able to climb the ladder of success faster, and they do!

KV Kamath takes home 10,00,00,000 per month as salary, how is that for success! He also holds stock options in the bank that he is heading. Do you think the owners of these banks pay these salaries?

If you said yes, you are completely wrong. It is the customers of the bank that make it possible for the company to pay Mr. Kamath the salary quoted above. And what does Mr. Kamath and his team do? Find new ways of cheating the customers that are paying for his salary!

The Loot is over

For 24 Years, Private and Foreign Banks such as Citibank, Standard Chartered Bank, ICICI, HDFC, HSBC, Kotak, ABN Amro, GE Countrywide, IndiaBulls, etc. have flouted interest rate regimen and looted the people of India in the guise of giving soft loans at exorbitant rates of interest.

These rates have ranged from 20% to as high as 80% all in the name of unregulated interest regime allowed by the Reserve Bank of India.

As an association of people utilizing credit from these banks, we have been petitioning RBI to stop this practice of giving usurious loans to unsuspecting people. We have staged countless demonstrations in front of these banks and have maintained constant pressure on the RBI since 2003.

Under the able leadership of Mr. Vijay Kamble and the hard work of his team CCAI has been finally successful in getting the monolith RBI to take note of the problem plaguing the system.

RBI has now pegged the maximum rate of interest at 18% per annum diminishing. What this means is that if your loan is at any other rate, you can have it reduced to this rate as anything more than this is considered usurious by RBI.

We are seeking a similar reduction on credit card rates too and very soon you can expect relief from high interest rates there too!

CCAI has been working tirelessly since 2003 for protecting the exploitation of the general public at the hands of MNC and Private Banks. Join us in our fight against the heavily biased banking system that favors the bank and penalizes the common man.

Call us now!

Credit Consumers Association of India
3/141, M.H.B. Colony, Ram Mandir Road,
Kher Nagar, Bandra (East), Mumbai 400051
Tel: 91-22-26474857, 26471908, Email: ccai.mumbai@gmail.com

CIBIL the new Evil

CIBIL (Credit Information Bureau of India Limited) is the new evil that threatens to disturb the lives of common Indian people.

CIIBIL setup by an Act of the Government of India, is a privately held company. The mandate of this company is to provide lenders with data on people who have availed credit. This agency monitors all loans, credit card data and personal loan information.

But the problem is the company will not provide you with your own credit report!

Internationally too, credit bureau's followed a similar method until consumers fought back and got the right to access their own credit report at least once a year free of cost.

How does this report affect you. Read below experience of international consumers

The Creditor/Consumer relationship seesaws

Originally, credit reporting services were created for the benefit of creditors. In the beginning, the consumer just went along with the system. However, as time went on, the consumer, backed by the government, forced the issue and gained some encouraging ground. Errors on credit reports could drastically affect someone’s life, in that they could be refused employment, refused tenancy, refused credit, and generally be given a bad name in the credit industry. So the consumer fought for access to their credit information.

Now, as the system stands, the scales are much more balanced. Consumers have more rights: to see their credit report information, to object to errors in them, and a number of other positive outcomes. And for the credit bureaus, more information could be collected, and they could sell that information to marketers for extra profits.

So it seems that both sides are content with the system. But each side, the consumer and the credit bureau, is constantly jockeying for a better position. So the relationship continues, back and forth. But the bottom line for consumers is, as mentioned, credit reports can deeply affect their lives. That’s why it’s so important to check your credit report regularly – and have peace of mind.

Taken from http://www.thehistoryof.net/history-of-credit-reports.html

It is now up to the people of India to get similar access to their own credit reports. How many of us have not had a dispute with our lenders? It could be over wrong billing, fraud, excessive charges for which we have refused to pay up. All these delinquencies are being put on your credit report and they will make life very difficult for you in days to come.

More writing on the problem can be accessed at http://www.msnbc.msn.com/id/6612374/