Experience in train

Sometimes, when I have nothing to do, I catch a train and venture off alone to someplace around 1-2 hours from my home, towards the countryside. As the train passes through fields of paddy, swamps and bridges on rivulets, I feel an inner peace which I cannot describe in words.

Trains in India carry all kinds of people. another reason why I love travelling on them. You connect with the people, you understand who you really are, you identify your roots, your culture.

On one such journey, a visually impaired woman in her twenties boarded the train. She was selling incense sticks for a very meager price. Our compartment had around seven to ten passengers. Two of them bought a few sticks from her while the others ignored her. She, kept smiling. Then she sat down beside me, feeling and counting the money.

I was looking at her all this time when she asked,  "Has the next station arrived?". As there was no one around,  I replied, "Not yet. How much are those for?". "Ten rupees", she replied.

I bought two boxes, and in my curiosity, asked her how she sustains herself with such a low income.

"Oh no Sir, these incense sticks are my world. All the money I get, I use them to run my school. It is a small school, for children with visual and auditory disabilities. I teach them, I prepare food for them, I tend to them when they are ill. They have learnt how to make these sticks, they have learnt how to spell and draw. I sell what they make, and together we earn money. We are a family. I cannot think of anything apart from them. They are my life, these sticks are my life. What more can one want", she replied, smiling all the while.

I sat there, with wet eyes, thinking of all the luxury we enjoy and still crave for more, while people like her are happy with just the little kids and those thin sticks. She got up, thanked me and made her way slowly towards the exit.

From then, I was a changed person.

GDP poverty HDI

Banks

Please share this info with your kids to give an idea about on how banks work.

Son: I have heard recently that Mr. Rajan has reduced Repo Rate by 50 basis points and everyone is saying that this is good for the market. Loan EMI may also come down. What is this rate cut means actually? I want to understand this.

Dad: To understand this you first need to know, how does a bank function.

Son: Why?

Dad: Because all these are inter-related. Tell me – what does a bank do?

Son: Bank takes money from depositors and gives loan to earn interest. That way they keep everyone happy and make a profit also.

Dad: Correct, but there are more to it. Let me explain this in a very simplistic way. Bank needs money. Bank can get money from depositors like you and me and also from RBI. But bank also needs to pay certain interest to us and also to RBI.

Son: Ok.

Dad: Let us try to understand first – what happens when we deposit, say, Rs. 100 with a bank.

Son: I know that. Bank gives that Rs. 100 to someone who needs a loan.

Dad: No, it is not that simple. Remember, though bank can earn interest by giving away loans, but it is also very risky. There are many cases of loan defaults. This way banks can put all our money into high risk areas. It has to be protected.

Son: How?

Dad: Ok, RBI has made it mandatory that upon receiving, say, Rs. 100 – banks first have to deposit Rs. 4 with RBI. RBI keeps this Rs. 4 in its current a/c and hence banks do not receive any interest on this money. This is known as Cash Reserve Ratio or CRR, which is currently at 4%.

Son: Hmmm, then?

Dad: RBI has also made it mandatory that upon receiving, say, Rs. 100 – banks need to compulsorily buy central and state govt. securities of Rs. 21.50. Of course banks will earn some interest income here. This is known as Statutory Liquidity Ratio (SLR), which is currently at 21.50%.

Son: Ok, so you mean to say that upon receiving Rs. 100, banks can spend only Rs. 74.50 at its own will.

Dad: Correct. 100 – (4 + 21.50) = 100 – 25.50 = 74.50

Son: But you were saying that banks can also borrow from RBI. What interest banks pay to RBI?

Dad: Before 30th September, banks were paying 8.25% interest to RBI when it borrows money from RBI. Now this rate has been reduced by 50 basis points. So banks now need to pay interest to RBI, if it borrows from RBI, at the rate of 7.75%. This is known as Repo Rate.

Son: Can fixed deposit rate be affected by reduction of Repo Rate?

Dad: Of course. If banks get money from RBI @7.75%, why will banks pay higher interest to you and me? One year FD rate is already revised by many banks and it is equal to or very close to 7.75%.

Son: But as now banks are getting money at a cheaper rate, then they should reduce the loan interest rate i.e. passing on the benefits it receives.

Dad: Correct. They should. And on that hope market is cheering. If companies get loan at a cheaper rate, they will likely to expand their businesses. That will create more jobs, more income and boost the economy.

Son: How is inflation linked to this?

Dad: See, when loan becomes cheaper, people tends to borrow more. That means people will have more money to spend. This will increase the demand for goods, and if supply does not increase to match this demand, then prices will increase.

Son: So there is a chance, that inflation may rise also?

Dad: Well, yes. But inflation depends on many other factors as well, like production (industrial and agricultural), manufacturing, export – import, foreign currency movement etc. So inflation may increase or may not.

Son: One last question. Like we deposit our money with banks, can banks also deposit their money with someone?

Dad: Yes, they can deposit with RBI and earn interest too. This interest is typically 1% less than the repo rate. This rate is known as Reverse Repo Rate.

Son: Great! So now Ib understand CRR, SLR, Repo Rate, Reverse Repo Rate and their impact on deposit rate, loan interest rate and on inflation.
One must read

maybeHeDoesntHitYou

#maybeHeDoesntHitYou but threw a huuuge raging weeks long miserable fit coz u cut your hair 'without his permission'.

 #MaybeHeDoesntHitYou but he won't let you go home or see your friends very often or at all.

 

 #MaybeHeDoesntHitYou but he compares you to other women, criticizes your body and constantly tells you, you aren't doing enough for him.

 

#maybehedoesnthityou but he says you should be grateful he doesn't

 

 #MaybeHeDoesntHitYou but he makes sure you believe that you're too broken/damaged to ever be wanted by anyone else

 

#MaybeHeDoesntHitYou but he belittles your mental illness and makes you feel terrible about things you cannot control

 

 #MaybeHeDoesntHitYou but steals and hides your medication.

 

#MaybeHeDoesntHitYou but he threatens to kill himself when you muster up the strength to leave. So you stay and are manipulated even more.

 

#MaybeHeDoesntHitYou but instead he isolates you and destroys all of you platonic relationships so he's all you have

 

#MaybeHeDoesntHitYou but he threatens your financial security, undermines your authority & constantly tells you you are nothing without him.

 

#MaybeHeDoesntHitYou, but he tells you what friends you're "allowed" to have.

 

 #MaybeHeDoesntHitYou but he will call you no less than 40 times when you choose not to answer the phone to avoid a lecture or argument.

 

 #MaybeHeDoesntHitYou but he screams at you even if you did nothing wrong.

 

 #MaybeHeDoesntHitYou but he makes you believe that you're too broken/ugly/useless to be wanted by anyone else besides him

 

#maybehedoesnthityou but he criticised you everyday, he compared you to "better" women & told you you will never be/look good enough.

 

 #MaybeHeDoesntHitYou but he swears he'll never yell at you like that again. Just don't make him so mad. "Promise.."

 

 #MaybeHeDoesntHitYou but he purposefully fails to communicate & resolve issues that are hurting you because he enjoys having power over you

 

 #maybehedoesnthityou but you need his approval for everything and he treats you like property and not a person