Savings vs consumerism
With my investments I have been hitherto happily content, alike one third of Indian population, keeping the perils of share-bazaar out of the purview. A recent print article by Vishnudutt Nagar provoked me to wonder on the irony of this. People like me who rely on small-saving schemes, saving accounts and term-deposits have been of the opinion that the money is not risked at any point and that banks were pious institutions that encourage the notion of “savings” amongst common janata. Current trends belie this notion. Nagar says that in last 2 years banks have actually reduced interest rates on deposits and saving accounts by as much as 26%. On the contrary the lending rates have been dropped only by 4.2%. Obviously the intention is to ensure that the industries get loans at lower interest rates, but they it seems have been looking at other greener pastures.
Coming bank to the point of the concept of savings that banks were supposed to instill, the institutions are in fact doing the very opposite. In the last 4 years interest rates on small saving and term deposit schemes have been slashed by 4%, a fact detrimental for the middle income groups and retired individuals. Instead the banks are now resorting to providing attractive interest rates on loans to purchase luxury items like cars. Besides promoting the interest of the consumerist culture the banks are also participating in share markets inviting unnecessary risk and instability. Is there any safer place left for my investments?