The recent crash of edges across the world has put fear in everyone’s minds, including us Indians. A few questions that have been running across people’s thoughts include – What will happen to edges in India? Will they crash? Can they crash? How can I sleep peacefully if I doubt my bank’s stability?
Though we can nevertheless vividly ingemination our grandparents discussing edges as being the safest place to keep your money in, suddenly the whole idea seems outdated, just as some of their ideologies! So orthodox, so risk averse! Why can’t they realize that we are the “X” or the “Y” or “Z” generation that will take India to being a superpower?!
Orthodox, risk averse… do these words average anything with respect to banking? One need not think long and hard to realize that these are precisely the two words which have ensured that the Indian banking system and Indian edges have survived the global crisis and continue to do so.
What does this average?
The Indian banking system has mostly evolved from business families or groups of business families coming together to start a bank. Indian businesses have historically been risk averse and very calculated in their business dealings. The same philosophy consequently was passed on to the edges which they established and in turn it defined the Indian Banking System, a system that did not want to grow by leaps and bounds, but instead in a steady, phased manner. This meant that there was never too much pressure on increasing business at the cost of taking unwarranted risks.
This philosophy is also the reason why it used to take months and sometimes years together to get a loan from an Indian bank. A shared occurrence was the bank employee delaying loans so that they were not burdened with collecting/following up on defaulting! Risk Averse? Definitely!
An orthodox management style meant that the edges were not very keen on innovating. consequently, we rarely got to see any inventive product or exotic financial tool in the banking sector. This in turn meant that what was obtainable for dealing was simple. Run of the mill, proven products which almost everyone understood. at the minimum in that context we could call ourselves financially literate in comparison to our counterparts from other parts of the world who could not comprehend complicate financial products like balloon loans, exotic “F&Os” etc. and made a mess of their finances due to their without of awareness.
The central bank, the save Bank of India too has also evolved in the same manner. It has been more careful and conservative in its approach towards banking. This approach has meant that the Rules and Regulations framed by the “RBI” have been very stringent and have not had many loopholes. The Central bank has also consistently tackled pressure from private businesses and the political system.
The observations above indicate that although our orthodox, risk averse system may be tough on the “Twitter age” generation in its slow speed, it is strong and strong and looks to conquer and survive any crisis. We can indeed sleep safe with the satisfaction that our edges are safe. Yes, your Indian bank (not The Indian Bank) is safe!!