Team-BHP > Around the Corner > Shifting gears


Reply
 
Thread Tools Search this Thread
Old 18th October 2019, 15:30   #61
BHPian
 
Join Date: Aug 2009
Location: Bangalore
Posts: 155
Thanked: 122 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

Quote:
Originally Posted by CarJunki View Post
Well the ground reality is still same as of today.
Future situation based on last weeks decision may vary.
District level co-operative banks are only one part of the game.

A co-operative bank can be created by any group having 21 or more people.
In effect the Act governing co-operative societies are not changing, thus nothing prevents new swiss banks from starting.
Cooperative banks act on the basis of the Acts governing it -- this is true. Your comment mentioned it is some sort of state mechanism that keeps the KYC relaxed, which is not true at all.
The last week's RBI approval came after many years of going thru the process obviously. The large scale cooperative banks, basically those which can go bust like PMC with loan frauds are the District coop banks and the government has been actively trying to get it to be a regular bank for a long time.
ashokrajagopal is offline   Reply With Quote
Old 18th October 2019, 17:02   #62
BHPian
 
vrprabhu's Avatar
 
Join Date: Oct 2008
Location: ??
Posts: 988
Thanked: 593 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak


Quote:
Originally Posted by SmartCat View Post

Quote:
RBI must ensure that at least banks should not offer differential rates on the basis of their perceived solvency.
That's the whole basis/foundation of interest rates. Higher the risk (solvency), higher the reward (interest earned). If you mess with this concept, it will have disastrous unintended consequences.

10 year G-Sec trades at ~6.50%.

Interest on 10 year deposit by SBI 6.25%.

Government of India is paying you higher rate of interest than the biggest Bank in India

Conclusion - GoI is in a bigger mess than SBI?

PS - Individuals can invest (trade) in Gilts - Government Securities - no other security is safer than this. Those with deep pockets can afford to make money through capital appreciation as well, in the long run....


Quote:
Originally Posted by saket77 View Post
Your posts on the matters of finance are really enlightening and I enjoy reading them always.
Yes - me too!!

Last edited by Aditya : 21st October 2019 at 08:57. Reason: Extra smiley deleted
vrprabhu is offline   Reply With Quote
Old 18th October 2019, 17:13   #63
Team-BHP Support
 
SmartCat's Avatar
 
Join Date: Jun 2007
Location: Bangalore
Posts: 4,371
Thanked: 21,724 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

Quote:
Originally Posted by vrprabhu View Post
10 year G-Sec trades at ~6.50%. Interest on 10 year deposit by SBI 6.25%.
wow, it makes no sense to invest in 10 year SBI fixed deposit at 6.25% then. I guess nobody does that anyway.

Bonds are different from deposits, and not easily understood by many. You can break your FD anytime with almost no penalty. But when you try to exit a bond mid-way, you could end up either losing a part of capital invested or you could end up with large capital appreciation (like stock).

But when a bond is held till maturity (10 years, in this example), it behaves like a fixed deposit.
SmartCat is online now   Reply With Quote
Old 18th October 2019, 17:35   #64
Senior - BHPian
 
sdp1975's Avatar
 
Join Date: Aug 2009
Location: Bangalore
Posts: 1,672
Thanked: 1,060 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

GOI 7.75% taxable bonds are a good option. There's a 7 year lock-in and no premauture exit route. Offered in cumulative and non-cumulative forms.

https://www.rbi.org.in/Scripts/Notif...d=11196&Mode=0

However, the rate may be reduced anytime. A couple of years ago it was at 8% and then brought down to 7.75%.
sdp1975 is offline   Reply With Quote
Old 18th October 2019, 21:05   #65
BHPian
 
rulerofsun's Avatar
 
Join Date: Jun 2009
Location: Thane
Posts: 154
Thanked: 108 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

Quote:
Originally Posted by SmartCat View Post
However, I don't think depositors in scheduled (mainstream) banks have ever lost money since nationalization. The last time a bank shutdown was in 1994 (Global Trust Bank). Depositors lost nothing - Govt forced Oriental Bank of Commerce to acquire GTB.
Very true. The Co-Op bank Scheme was structured for rural development but most just worked in the urban environment.

https://www.rbi.org.in/commonman/Eng...nbankdept.aspx
rulerofsun is offline   Reply With Quote
Old 18th October 2019, 23:36   #66
Senior - BHPian
 
Chethan B G's Avatar
 
Join Date: Mar 2010
Location: Bangalore
Posts: 1,553
Thanked: 1,298 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

One quick question: Can a depositor have an insurance externally, to cover the deposit required? If so, why is this not practiced?

Sorry if it is silly or out of topic.
Chethan B G is offline   Reply With Quote
Old 18th October 2019, 23:38   #67
BHPian
 
Vipin Kumar's Avatar
 
Join Date: Jul 2011
Location: Lucknow
Posts: 408
Thanked: 244 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

Quote:
Originally Posted by SmartCat View Post
However, I don't think depositors in scheduled (mainstream) banks have ever lost money since nationalization. The last time a bank shutdown was in 1994 (Global Trust Bank). Depositors lost nothing - Govt forced Oriental Bank of Commerce to acquire GTB.
Not in 1994. It was in 2004, I suppose. Dr. Manmohan Singh as PM himself had intervened to ensure the forced merger of GTB with the Oriental Bank of Commerce. In fact, GTB was not given a choice in this regard.

However, for a few days, there was panic as the people were unable to withdraw their money/deposits. Things were quite uncertain for them for week or two.
Vipin Kumar is offline   Reply With Quote
Old 19th October 2019, 08:14   #68
Senior - BHPian
 
Sebring's Avatar
 
Join Date: Apr 2011
Location: Dubai/Bengaluru
Posts: 1,206
Thanked: 2,448 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

If you are getting 5% return on FD, and 10% is TDS, will you have money left to cover your principal amount? Gold is best investment, and has always been. My new realisation.

Quote:
Originally Posted by Chethan B G View Post
One quick question: Can a depositor have an insurance externally, to cover the deposit required? If so, why is this not practiced?
Sebring is offline   Reply With Quote
Old 20th October 2019, 08:13   #69
BHPian
 
Join Date: Nov 2018
Location: Hyderabad
Posts: 159
Thanked: 460 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

RBI is the culprit here, in terms of regulatory oversight or rather the lack of it. As per their own norms, they are supposed to conduct bi annual inspections of all scheduled and cooperative banks. RBI officers spend about two weeks at minimum at the branch, headquarters pouring through all records, audit trails etc before handing out a clean bill of health. Looks like such things were not done in case of PMC bank. I am sure more skeletons may pop out of the he RBI closet once CBI investigation picks up pace.
AirbusCapt is online now   Reply With Quote
Old 20th October 2019, 23:16   #70
BHPian
 
Join Date: Aug 2014
Location: New Delhi
Posts: 422
Thanked: 515 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

Quote:
Originally Posted by Sebring View Post
If you are getting 5% return on FD, and 10% is TDS, will you have money left to cover your principal amount? Gold is best investment, and has always been. My new realisation.
The 10% TDS is on the interest income of 5%. not on the principal amount. Currently interest rates are around 7 to 8% though.
Lobogris is offline   Reply With Quote
Old 21st October 2019, 00:05   #71
Team-BHP Support
 
Samurai's Avatar
 
Join Date: Jan 2005
Location: Banglore-Udupi
Posts: 23,825
Thanked: 20,929 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

Quote:
Originally Posted by srini1785 View Post
Drawing parallels , FDIC ( Federal Deposit insurance corporation ) of the US guarantees complete refunds in the event of grand larceny, fire , floods etc. I don't know if it covers willful fraud, which is the case with PMC .
Why would fire, flood, etc., make a bank fail? Anyway, there is no full refund even from FDIC. It is limited to $250,000 per account type.

https://www.fdic.gov/deposit/deposit...e-english.html
Samurai is offline   Reply With Quote
Old 21st October 2019, 06:21   #72
Senior - BHPian
 
Sebring's Avatar
 
Join Date: Apr 2011
Location: Dubai/Bengaluru
Posts: 1,206
Thanked: 2,448 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

He is asking if principal amount can be covered with insurance. That cover will cost, right?

Quote:
Originally Posted by Lobogris View Post
The 10% TDS is on the interest income of 5%. not on the principal amount. Currently interest rates are around 7 to 8% though.
Sebring is offline   Reply With Quote
Old 22nd October 2019, 10:00   #73
BHPian
 
Join Date: Dec 2005
Location: bang
Posts: 189
Thanked: 214 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

Quote:
Originally Posted by Samurai View Post
Why would fire, flood, etc., make a bank fail?
Not the money in your account but the valuables in locker. Agreed, It won't result in bank failure.

Quote:
Originally Posted by Samurai View Post
Anyway, there is no full refund even from FDIC. It is limited to $250,000 per account type.
Standard is 250,000 USD but can be extended for higher premiums.
srini1785 is offline   Reply With Quote
Old 24th October 2019, 14:19   #74
BHPian
 
Join Date: Nov 2004
Location: World
Posts: 119
Thanked: Once
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

Quote:
Originally Posted by Samurai View Post
... there is no full refund even from FDIC. It is limited to $250,000 per account type.
Quote:
Originally Posted by srini1785 View Post
Standard is 250,000 USD but can be extended for higher premiums.
Not to forget about the important issue of the relative purchasing power of the two currencies! With $250,000 a family of four can survive reasonably well (by Indian standards) in the US for at least a decade (I'm not talking about any luxury, or health care and such, ... just basic survival). With Rs. 1,00,000 how long or how well will such a family survive in India?
.

Last edited by meerkat : 24th October 2019 at 14:22.
meerkat is offline   Reply With Quote
Old 24th October 2019, 15:56   #75
Senior - BHPian
 
Join Date: Jul 2008
Location: Bangalore
Posts: 2,079
Thanked: 499 Times
Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

Quote:
Originally Posted by meerkat View Post
Not to forget about the important issue of the relative purchasing power of the two currencies! With $250,000 a family of four can survive reasonably well (by Indian standards) in the US for at least a decade (I'm not talking about any luxury, or health care and such, ... just basic survival). With Rs. 1,00,000 how long or how well will such a family survive in India?
.
I just hope FDRI 2017 bill which as junked due to stiff opposition in last parliament is brought again and sees light of the day , I wrote about it on this thread few posts back.

one lakh might have been a big amount in 80s but not now, deposit insurance amounts should be inflation linked.
amitk26 is offline   Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search


Similar Threads
Thread Thread Starter Forum Replies Last Post
ARTICLE: Common SCAMS Encountered on Indian Roads - A Compendium SS-Traveller On owning a car 68 1st November 2019 14:48
Innova 7/8 Seater SWAP| Are Seat Mounting bolts Layout common (for Middle Row only)? btirthankar Modifications & Accessories 26 31st August 2016 10:23
Tata-Fiat ASC: Closures, Defections, Re-arrangements in NCR architect Indian Car Dealerships 31 30th March 2013 16:14
Why Men Love Cars More Than Women ? lambuhere1 Shifting gears 3 1st November 2008 12:47
Why are men not used in modeling with Cars !!! dadu Shifting gears 16 6th February 2008 11:59


All times are GMT +5.5. The time now is 09:32.

Copyright ę2000 - 2019, Team-BHP.com
Proudly powered by E2E Networks