 
An Insight into Indian Money Markets
As i have mentioned in previous post, im in Goa right now, Sorting out too many issues. Helping my Goa teams with their related complex projects. i will be in Kuwait soon. But till then, im here.
I had a huge list of things to do with the banks over here. Some of them involved me loosing a lot of money with the recent US downfall and also with the Indian Stock Market crashing. So i decided to meet 3 Major banks in Goa. i wont name them yet( will mention this part later).
Now i have a point to note. We(including myself) are upcoming in Life. there was a time i was broke with basically no money at all(in my wallet, kuwait bank or indian bank), i couldnt plan the future nothing. Today, i have reached a stage, were i own 2 major companies in Goa. One being the largest in South India. I do not compare my self as TATA’s or Reliance or Kharafi. I still consider myself as small, coz whatever profits i get , we still reinvest into business for betterment of staff, technologies etc.
So for both personal and corporate financial advisories, we highly depend on banks , to ensure that we are in the right track. But now a days … there are 2 sectors of banking.
Government Banks(Nationalised Banks)
Private Banks
Now Government Banks are like a government office. no respect, no suggestions, mistakes in billings, loans etc etc… its typical a sad situation. The private banks , are full of promises , ” you will get this and that, and your money is super safe, and makes tooooo much etc etc.”
We as “humans”, would love to see our hard earned monies be safe and auto increase without any effort. So we fall for these bankers. The moment you have put your monies with them. IT BLOODY ENDS THERE. No more Support, no more advises. nothing.
I had some meetings with the Managers of these banks, i told them , we dont get any support, we have lost quite a bit on Shares and Mutual funds etc. You no longer advise us to to save here or to invest or to even withdraw our investments.? They are like ,,,, “we are sorry”, ” we dont have employees” , ” we are over loaded” … what the FUCK!. im like, i can understand shortage of staff … but a BANK .. crying for 2 years now ? for lack of staff?
Then it slipped out. See Ray, if you can spend 35 Lakhs minimum investment, we can get you a dedicated Wealth Management Profile. Im like … why 35 Lakhs? why not less. They are like we are sorry, thats the minimum. I said i dont have issues about the money. But what about the common man. Dont they who want to make some money by investing their hardearned money, dont they deserve to these services. They said “sorry no”.
im like … Even for my corporate accounts, my staff salary accounts. you treat us like dirt. I told them straight “Im NOT TATA or Salgaocars or Reliance” But one day my future generations will definitely be like them.  Im like , i dont have so much money with me , But i working my ass out to get there. and you BANKS dont even suggest me options!!!
Suddenly the Manager asked his staff, is he a priority Customer. she said NO. i was so what if im not a priority customer. I told them , i m an owner of 2 companies, i do not have a 9 to 5 job, like them,. the bank is handling my entire family and my 2 company accounts. So if they dont find me big enough to have my accounts … i should move…
it was simple for them to answer that …. “MOVE WHERE?”
So Summarising my Annoyance. The Banks cater only to the highest class, who have loads of money, they get all the guidance and support, while the poor and the middle class are left to fend for themselves. So summarising my point “the Rich get richer” this is true, coz with all the facilities thrown at their feet. they are bound to see their money grow. While for us, we are left with the following options
- Watch and dream about this.
- Slog your life out , so that your future generation will be pampered by banks and others
- anything else??????????
So for a middle class entreprenuer … whats the difference between a Government Bank or a private bank? its bloody same.
Goan Banks are shit-holes!
I don’t see anything wrong with the bank’s behavior or answer.
Sorry mate. Just my views.
It could be, because I do the same.
Someone comes up to me and asks me to manage their money, the first thing I want to know is, “how much money is it”. Some amounts are just not worth my time.
We all want the best service and all that. Seeking advise from banks? like the banker mentioned, you don’t get that unless and until you are a priority customer.
There are tonns of portfolio managers and fund managers all over the world, including india, who do cater to investors with a lower balance and provide you with service more or less along the lines that you may be looking for.
The ones willing to accept the lower amounts - investors aren’t cool with them (at least that’s what I have seen). reasoning.. “they dont have big clients, they are new, they are just starting up, I can’t trust them “. - something like that
So you see, it works both ways.
Waise bhi.. if it is a nationalised bank, you might as well forget getting any advise from them on a regular basis. If it is a private bank.. hell - why not pool up all your money, under various accounts and push it into just one account and get yourself a private banker (more like an investment consultant). I am sure it would involve you signing up a few papers, and talking to your family members (you mentioned your entire family has an account with the bank)
Surely wouldn’t be that difficult to incorporate.
I would actually suggest, pull out your money, maintaining only the minimum balance, in your present bank. Move to a new private bank and dump all that money, from all the accounts under one joint account or whatever (work it out with your family members/bankers/lawyers/accountants) and get the service you want.
I know this is going to sound insensitive, but the RICH getting RICHER is really not a bad thing. Everyone wants to make money and I don’t think there is anything wrong in that.
Some of us manage to. great. Ones who don’t .. well they must be missing something somewhere.
Lord Raj,
You could be right… but look at it from this point of view….
Define a “BANK” …. “http://en.wikipedia.org/wiki/Bank” if you read it through .. they specify “Customers” ! Means many, or summarise term for clientele… i can agree with you, if you are an individual agent and dont want to take a load of unnecessary low waged customers.
But if you consider it as a corporate bank, catering to millions … For example. it is easy for NBK to say.” From today, lets not deal with expats, who dont have more than 10 K in their accounts.” But this would mean dropping 100K members off their portfolio.
Banks accumulate money from bulk accounts and give them as combined on lending purposes.
Now coming to the stage of life. How could a person come into a bank and say i got 50lakhs, please invest.
- he inherited it.
- he won a lottery
- he gets a high salary, accumulated it to become this much
- he sold an asset worth that much(land,building etc)
- he borrowed from elsewhere.
- Or he accumluates his life’s savings..
So for a person to have a big amount for the bank to accept him, would come from the above(unless i missed something) … so that leaves us with the residue of people, who dont come in that category and wanna become big in life… to which there is no one there to guide and support them.
if you read between the lines. you would notice you mentioned to go in with a private fund/portfolio manager, then whats so different between a private bank vs a government bank.. if they(private bank) doesnt provide this service , even in a limited sense?
So i assume, in short , people should invest money into a single private bank and then hire a personal portfolio manager to manage them all.
Hmmm …..
Well coming to your example, if people come to you and say , Lord Raj pls take care of my portfolio. you say how much money you need to invest .. Very true, i would do the same.
But if you go out to the world. inviting people of all kinds and sorts and tell them that im different, im out to help and guide you , and get into this and that. And once people invest and you dont bother to further guide them……
you end up segregating your customers. !!
I feel its like Indian Politicians.,.. they want the mass crowd, but finally they will choose the cream of the crop… while the budding flowers are ripped off..
BTW ,, this is a healthy debate
Cypher : i have heard that , while on Bank queues …
Rayboy -
Good points.
But people / institutions do have a minimum set. Basically if you look at NBK (for eg), they have funds (investment vehicle) managed by them. If an investor wants to put up money, the minimum amount they require is KWD 25,000 (depending on which fund you choose to invest in)
at the same time, a money market fund in CBK has a min. of KWD 5,000
and you have Global Investment House, that take up a min. amount of KWD 100! for an investment in money market funds.
Different institutions, different minimum requirements. Structure of the fund is pretty much the same. The returns of course are varying.
Works pretty much the same way world around.
BTW.. like you said, this is a healthy discussion.
don’t get many of these now a days.
just wanted to point out one thing, with the recent crash in the indian markets, there were plenty who made money, there were plenty who lost money. there were plenty who lost just about everything they had.
The ones who lost out, although they were or might have been - acting on the advice they were getting from the banks, are still in no position to go to the portfolio manager or the bank or whoever and catch them by the throat and ask for the money back.
Segregation of customers or clients is required.
What works for you, might not work for a client with less money.
Mr. A might have a higher exposure capacity than Mr. B. An institution might be more competent in handling investments in one particular market and not another.
The client has to choose which institution has the product or competence or options that suit HIM.
An institution could cater to just one type of market or to multiple markets, depending on its experience, expertise etc. and will obviously be segregating clients. Some with a higher liquidity, some with a conservative approach. Some wanting capital appreciation, some just happy with capital preservation.
So you see, Client segregation isn’t the same like DISCRIMINATION.
I am curious to know the name of your company.. the one that is ‘the largest in South India’
Its called “Graffitisys”
we are currently catering to Goa, Maharastra, Bangalore, Tamil Nadu … Hopefully soon to Kerela
Kewl.. but, unless u cater to kerala u can’t b the biggest in South India..
Good luck with ur expansion plans..
you are quite right.. but im currently working out with local partners in Kerela to expand… should go live by June 2008
Hi Raymond i stumbled upon your site. Its a nice reading. I would suggest you read Robert Kiyosaki’s - Rich Dad Poor Dad and all the other series relating to same. Regarding the frustation you are facing with the bank its really true but you have to move on. Today there are so many banks so move to a smaller branch with more personalised service
Hi Ray,
Actually I am pretty much familiar with the workings of Indian banks and Kuwaiti banks. Would you believe me that in India a bank typically makes around $2 profit every year. On the other hand in Kuwait that profit is over $100 at least and that is on the conservative side of the picture. Earlier banks used to work on nine to five basis. That means that they used to lend money at 9 percent and borrow it from central bank at 5 percent and make 2 percent profit deducting the operating expense and defaults. Some suggest that it was actually you go to the office at 9 and leave for golf at 2 and go back home at 5. Now they work on 7 two 20 basis. You pretend to start work at seven by switching on your laptop at 7 in the morning at home and switch off at 20:00 hours in the evening. Some suggest that it is actually you borrow at 2 percent from the depositor and write off 7 percent as credit losses on portfolio and lend at 20 percent on the personal loans. So here you go, who says that the banks have not yet modernized.
I would say it’s a sad situation wherein we earn our salaries by working hard & live our lives. We are always trying to save. By saving I mean making your money work for you. Where else can your money work for you if not at the banks? Due to the bad rates of the deposits, we try to get into Mutual Funds or Shares, but you still need expert guidance on what & when to buy & sell. So if banks will cater only to the “Bigs”, what about the others who are working hard & then trying to make their money work?
Lord Raj, I would definately say this is customer discrimination and I’m even more amazed that we have to accept it as a way of banking life!
About banks promising the stars to get their accounts flowing & then pathetically saying that they are under staffed, I would say that’s their “pathetic gimmick”. Because, if they very well knew that were under-staffed, they should’ve told you, please go to another bank, we are unable to cater to you because we are uselessly understaffed. But no, they hog up the monies which ofcourse the banks invest & roll on to various funds & make our money work for them while we hopelessly wait to see the promises met.
I’d definately say it’s a sad situation…..& I really wonder where to go from here….coz this only means — Your money will never work for you, but you always have to work harder to make more money.
Rayboy, I totally agree with you, as I face exactly the same.
Lord Raj…surely there are those who are missing something somewhere - being born with a silver spoon. So is it fair after working hard??
Melwin, what exactly do you mean by “a smaller bank” - another private bank who we hope & think can help us OR the stooopid nationalized bank who gives a damn? Personalized service in private banks is definately available BUT only for those whose account is filled with 35 lacs!!!! Go where?!
Observer, surely banks have modernized, they have improved on how to roll on funds for their betterment AND they have also improved by fixing a good fat ceiling (35 lacs) as a deciding factor whether to guide their customer or to hell with the customer. Modernization!
It’s damn not fair!
Cypher…
If you buy an economy class ticket, do you expect the same service a business class passenger would get.
now you can call it customer discrimination and make it sound bad.
I call it segregation of services.. and in my opinion, IT IS NECESSARY.
Being born with a silver spoon.. well that could be one way of looking at it.
See, if you are born poor, it is not your fault, but if you live poor and die poor - IT IS.
don’t expect portfolio managers and investment companies to come knocking at your door saying that we will open up a portfolio for you for so and so amount. You have to find them. and it really isn’t that hard.
They do advertise.. but if you don’t see it or don’t know where to look for those.. it is not their fault.
Sure they are losing customers, but that is their flawed marketing.
If complaining about it gets you somewhere and a better deal .. SURE go ahead.. do it.
I don’t think it achieves anything.
Things don’t JUST happen for you. you have to make them happen for you.
It is not that people with small amounts DONT get professional portfolio management services, THEY DO. Might not be from the same bank Rayboy has an account with, but THEY DO manage to get the service.
It is very easy to blame others and point out their mistakes. But if it doesn’t accomplish what you want, it is an exercise in futility.
I just do not understand that it is such a big mistake that your minimum account balance fell below a certain limit and you get penalised through the monthly fee. Similarly if your check for the credit card bill was stuck in the mail or they (intentionally) cleared it after a delay that is your fault and you have to pay for that. However if they miss their profit projections or write of $1 trillion of bad debts (due to incompetence of their own) they go home with more than $20 million of annual compensation package. It is such an ugly scene to look at the profits earned by banks in Kuwait with such a lousy service!
Observer
i am not going to argue about the service bit.
But I will say, that no matter what service anyone offers, people always expect better.
Anyways, moving on.
As far as I know, most of the banks issuing credit cards, let you settle your payments online itself. The charges hitting your credit card are usually available online too and are updated. You don’t really have to wait for the credit card statement in the mail to settle your balance.
The details (credit card) are also available over the telebanking services.
About the minimum balance.. well at the time of opening the account, these details are given to the customer. and the customer IS INFORMED about the charges (penalty). If someone has a problem with it, they should make it clear then and there and look for an alternative. You come across one.. great. good for you and perhaps a lot of other people too.
Chill mate.
Next thing you will saying, when we make an investment in a fund, why do we pay a placement fee !! (well I don’t pay a placement fee, but that is a different story)
It’s your money, you are giving it to the fund manager and on top of it, he is charging you a placement fee.. you don’t find that questionable?
Then when you want to get out of the fund and ask for your money back, the fund manager charges you a Redemption Fee.. I don’t see anyone complaining about that either..
It’s your money, which you gave to them and they invested for you (by charging a placement fee) and now that you want it back (with the profits earned) they want you to pay a redemption fee as well.
no questions?
now.. further.. if the fund does great, the fund manager is entitled to a an incentive fee payable over the earnings that were above the hurdle rate..
hmm again.. no questions?
and I haven’t even gotten into the Management Fee..
When you buy shares (securities), you pay a brokerage commission to .. you keep those shares with the portfolio manager who charges who a Custody Fee
No questions again?
My point is.. if we start cribbing about the fees and this and that being charged by bank or financial institutions and start thinking the way you are thinking, hell I doubt anyone would ever put up any money in a bank or ever invest.
The charges are there and the customer/client is notified about these charges before hand itself. these are STANDARD OPERATING CHARGES..
sure there are loop holes to avoid some of the charges,
eg.
if you withdraw money from a bank and instead of using your ATM Card (for whatever reason, I had to do it, because my ATM Card was with my father) You walk in and go to a teller, you are supposed to pay a fee, if the amount is below 500 KD…
now.. you want just a 100 KD.. well you could ask for the 100 and pay the fees. OR you could withdraw 600 .. take the 100 you want, and deposit the remaining 500 back.. at the same time at the same counter and NOT PAY THE CHARGE.
you don’t expect your banker to come up and tell you about such loop holes and more… do you?
don’t cribb for things like this.. it doesn’t really make sense. Just because it is a big organization or is making money, doesn’t mean it is correct to label them as evil or cheats.
Wow… quite a bit for me to catch up
Hmmmmmm……I wouldn’t be surprised if Lord Raj is a banker himself…hmmmm that’s why you don’t get our point of view!