Category: Blogs

The development of financial literacy in India and the drive towards mobilizing people’s savings from currency notes or physical forms to banking transactions has been very fascinating. This has been with the advent of the development of banking technology’ as it is called now, which has moved rapidly and Indians developed the banking software for India. This has also extended to other parts of the world. This has reduced the requirement of personnel at the front end of the banking system, the physical brick and mortar, and what we were accustomed to as ‘counters.’ The elimination of many mundane tasks, especially cash transactions, has moved to automatic teller machines, where cash dispensing and now cash accepting have been automated. However, it still does not take away the fact that mechanization or automation still requires a human element to service this equipment and devices. The entire hardware and software that delivers this require constant attention and maintenance, now on a 24-hour basis – 365 days a year. This submission is about the conventional ‘across the counter’ system, it is felt that it requires better quality of service and what the people are missing. The topic is also about the increase in employment, that the look and feel and personal service should be in the banking sector. India requires the deployment of competent, young and experienced and mature people in the same arena, as banking constitutes the core and heart of the financial transaction regime. On this note, the Negotiable Instruments Act is one of the established legislation to deal with many aspects of Negotiable Instruments, which are common but are not in the public domain. Students of Commerce and students of Law are engaged in the study and knowledge of the application. The social aspect of India is that there are more than 500 to 700 communities that are spread all over the country and they have celebrations of various kinds of festivities. There are leaders of national stature and community leaders who were prominent enough that their days of birth are celebrated as holidays. Also, there are many religions in a diverse place like India and these religious communities celebrate various festivities and in a different nature and fervour than other parts of the country. The Negotiable Instruments Act empowers the State governments to notify these holidays at the beginning of the year before the year starts and this is done by a gazetted order and the commercial banks are bound to give a holiday to their staff at these respective locations. The questions are: 1. Are these holidays necessary in the context of development processes in India? 2. India as a single currency nation and where transactions are increasing across states and borders requires that the State governments declare these holidays 3. If a bank has a holiday in one state and its branch in another state has different holidays will it hurt the efficacy and efficiency of transactions? 4. Is it proper for the government to declare more holidays for their own staff and to the banking system than necessary? If one looks at the long list of holidays and the options that are given, the transactions for the public will get restricted to the number of days open. There are many more transactions than just transfers or cash handling in the banking system. A decision-making process is involved and Banks are required to administer and police the advances made, the loans made and the interaction that is required between a banker and clientele. India deserves more employment in the banking sector, not at an additional cost but to excel in the services that this nation needs, to become a 400 trillion economy. <p The banking sector can be state-owned or managed by co-operatives or any form of development banking, transaction banking and international banking that can expand the services to all six days, sometimes all the seven days, at particular points that the public can transact at convenience. Bank employment can increase to the point that the number of holidays can be enjoyed by the staff as optional even if the banks give reduced or truncated services during these days. The Banks and the Reserve Bank can notify the nature of transactions with limited staff that can make these banks function. It is therefore submitted to consider that: 1) The Negotiable Instruments Act be amended that the banking holidays are decided in consensus by State governments and Central government by the end of November of each year. 2) The number of religious holidays can be brought down to zero and employees can be given optional holidays that they can exercise leave to celebrate without hurting the banking transactions of the day. 3)The national holidays are brought down to a bare minimum of what is important. And in the course of this, the banking transactions will be spread across days and hours that the banks are kept open for transactions, which enlivens the economy. The banks are then able to deploy their people better in their functions and improve their internal quality of performance, as well as the external. In conclusion, State Governments and Central Government should establish a Banking Council of India, where there is a structure to integrate the various functions that the banking industry direly needs today in terms of cohesion to develop a national perspective. This includes various enactments and legislations to assist the banking sector in recovering their money lent. Ensuring an atmosphere of self-discipline and more importantly, to unify the handling of currency, which is a national perspective, as well as take care of the minute details and experiential aspects of banking from now to the next seven decades that will make India the greatest economy in the world.

India needs Hindustan Zaveri Bank, a wholly-owned Bank by the Government of India to handle all the required transactions in the bullion trade, which is gold, silver, platinum and precious metals. Indians have been acquiring gold for ages. India produced what is best possible and the people always enjoyed the surpluses and the form of savings was gold. As far as the 1930s, gold and silver were traded freely in India without any taxes because it was held as a form of currency. It was natural that whenever there was distress and crisis, individuals or institutions who held gold used to sell it and meet their requirements. Wealthy always had the preference to have gold and silver as their reserves. The introduction of currency has not reduced this intensity. The Reserve Bank of India is the only entity that holds gold in India and abroad. It should work with the Central Government to establish the Hindustan Zaveri Bank with a capitalisation of whatever gold that is held in reserves by an arrangement, which will make the establishment of the Hindustan Zaveri Bank. This was proposed by Professor B R Shenoy. The duty on gold was recently reduced in the central budget. Gold is such a freely moving precious metal that if there is a slight difference from one geography to another, one place to another, one nation to another, there would be a movement. Gold is held by central banks all over the world. The presence of gold as collateral will always mean that the bank will have the ability to have current account deposits as a matter of trust and reliability. This means that the Hindustan Zaveri Bank will be able to have current accounts and savings bank accounts at zero cost from global currencies. This will also mean that India will be emerging as the bankers to the world. Trust and reliability constitute the core of banking. Banking is not necessary just for individuals but for institutions around the world and they will have the highest level of trust when there are gold reserves. In India, individuals hold gold to such an enormous extent. The buying of gold in India is absorbing the surpluses of gold in the world. This can be channelled through the Hindustan Zaveri Bank as the controller and regulator for all gold activities in India by legislation and by conduct. Recycling gold is very important in the Indian context as individuals sell their gold at times of necessity. Gold related activities have reached new heights. Lending against gold is at the lowest cost and banks are actively promoting gold loans because it is the safest form of lending. India has very few gold mines; the one which was famous, the Kolar Gold Fields has been redundant and another small mine in Karnataka called Hutti Gold Mines also has lower yields. Gold depositories in India can improve employment and a movement of gold will involve more focus on the necessity of efficient logistics for precious metals. Depositories managed by the Hindustan Zaveri Bank can act as custodians for Indian and global gold. Regularising gold holdings will mean a lot of projection of substance and wealth. India is borrowing externally at high costs. This is because of certain weaknesses in the system, not necessarily of one institution or the government. The Government of India’s borrowings have reached a peak of over 90,00,000 crores along with the State government’s and the interest payout is almost 10,00,000 crores a year. The Central Government can borrow even in rupee terms with a structured arrangement with the Reserve Bank that will tide over the overwhelming expenditure of the Government of India, which is currently in the range of 6,50,000 crores. <p This is a legacy of inflation management of 10 years when enormous amounts were borrowed for the sake of expenditure and this can be pared down. The Government of India should be able to borrow at less than 2% per annum for at least half of its outstanding debt if it begins to make a structural arrangement. In the initial steps towards this, the Reserve Bank of India can entrust the gold to one nationalised bank and Exim Bank of India for two purposes: 1) To make available gold at international prices to all entities who are engaged in the fabrication of ornaments for export 2) It can act as a conduit for international trade by inviting gold as depositories and based on the daily transactions, make available gold at all designated branches officially. It is required to structure this in order to prevent gold smuggling, which is still present. Gold smuggling has got its collateral damage as a parallel economy is in circulation. Eliminating that parallel economy means that a minimal margin is charged at all levels on the basic transactions of gold. The gold economy can expand for India and abroad once it comes under thorough regulation. In this case, a strong government presence is a necessity. Eventually, people of integrity and networking will enable higher performance in the gold-related sectors and associated with precious metals like platinum, silver and similar materials. This can extend to diamonds also, where India has a very strong world presence. But the institutional support that is required needs resources, which can be channelled to make India the centre of precious things in the world.