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Nivedita Mookerji
It was a year of positive developments in the area of personal finance, but not without some setbacks. The good news first: Indian residents were allowed to use global add-on cards issued to their NRI relatives abroad; the number of credit card players shot up in the Indian market; more banks joined in to offer Internet banking; the Kar Vivad Samadhan Scheme was extended.
Now, the setbacks: The Permanent Account Number (PAN) became mandatory for several financial dealings, forcing people into a panic reaction; credit card blues continued for the cardholders.
In career growth and education, too, 1998 was significant. In the foreign education mart, France joined in with a promise of quality education at a lower cost. Britain, Australia and Canada, too, carried on with their hardsell of higher education at their respective fairs and exhibitions. Premier management institutes of the country offered several new executive education programmes -- both in India and abroad. Besides, newer techniques of managementevolved at various levels. But job cuts in big as well as smaller companies dampened the overall spirit.
Here's a look at the year that will soon be yesterday:
Global credit cards are here: Global credit cards finally arrived in India. Indian residents were permitted to use NRI add-on cards issued abroad. This was part of liberalising the exchange control mechanism. Earlier, resident Indians required RBI approval to use add-on international cards provided by non-residents. The requirement of prior approval has now been dispensed with.
VTM from Thomas Cook: After global credit cards, came global ATMs. Thomas Cook launched Visa Travel Money (VTM), which is like a round-the-world ATM card. The card is particularly useful in the US and in Europe because of the good ATM networks there. The VTM is a pre-paid, PIN-protected card, which can be used at 4,40,000 Visa ATMs in 117 countries to withdraw cash.
New credit card players: Even as credit card related problems continued, there werenew entrants in the credit card `mela' -- SBI and Amex. Industry experts felt that even though the addition of players in the credit card market may not result in a shake-out, credit card issuers would certainly sit up. And sure enough they did -- most issuers were seen offering freebies to enhance cardholder longevity. Most prominent among these was the offer to issue add-on cards without any joining fee.
Samadhan solution: If the Voluntary Disclosure of Income Scheme (VDIS) was the mantra last year, this year, the Kar Vivad Samadhan Scheme (KVSS) dominated the scene. KVSS, according to the Income-Tax Department, was a chance to pay up the tax on disputed income. In the end, what one got was a full waiver of interest and penalty.
PAN fears: The I-T Department made the Permanent Account Number or PAN necessary for most financial dealings starting 1998. The department announced that those without a PAN would not be able to open new accounts, FDs over Rs 50,000, purchase a house or a car,among other things. As a result, people panicked and started pulling out money from banks.
Spending, saving trends: A survey carried out by Credit Card and Management Consultancy (CCMC) came up with some striking revelations. For one, the survey found that travel and entertainment were in the topmost slot in the use of plastic money in India. Another survey organised by Mastercard International concluded that only 18 per cent of Indians (from a sample of 400) were satisfied with their level of savings and that 27 per cent Indians had no savings at all.
ING sets up shop: There was good news for high-net-worth individuals. The Dutch financial conglomerate, ING Bank, set up shop in Delhi, after launching its operations in Mumbai a few years ago. Tapping Delhi, with its cash-rich population was the idea behind the big step.
Interest rate war: In the beginning of the year, there was an interest rate war among the leading banks in the country. The banks were mostly competing forshort-term deposits. What began as a Treasury demand, later turned into a marketing exercise, but the war came to an end soon enough.
Handbooks for investors: 1998 was also a year of handbooks and guides for investors. The Association of Mutual Funds in India (AMFI), Investment and Credit Rating Agency (ICRA), State Bank of India (SBI), Insurance Regulatory Authority (IRA) and Reserve Bank of India (RBI) all brought out separate booklets to guide people on some aspect of investment or the other. The Securities and Exchange Board of India (Sebi), too, brought out a record book to keep one's finances straight.
Consultancy on consumer banking: As banks go retail in a major way, the focus of the allied services, too, shifted in that direction. For instance, the country's first specialised consultancy service on consumer banking and finance was launched. Named Consult Opportune, this consultancy service offers advice on critical issues relating to personal banking.
Bond for NRIs:Resurgent India Bond (RIB), issued by SBI, was a big hit among NRIs in the US, Europe and in the Gulf countries. The NRIs felt it to be a good investment avenue. An interesting twist to the bond issue came about when two non-Indians slapped a discrimination case against the issuers when they were not allowed to buy the RIB. The case is still awaiting judgement in a US court.
Internet banking: Internet banking found some new players. After ICICI Bank and TimesBank, IndusInd Bank, too, was actively promoting cyber-banking. But most foreign banks remained cyber-shy through the year. HongkongBank and Standard Chartered Bank categorically said that they were not interested in cyber banking yet.
France in the education mart: France came out of hibernation to become the new player in the education market. After the US, UK, Australia and Canada, now it's France's turn to woo Indian students to study in French universities at a lower cost.
First corporate business school: The first Indiancorporate business school was announced this year in Hyderabad. To be launched in 2000-2001, the Indian School of Business (ISB) aims to offer the best in management education. The main players behind the institute are the Wharton School at the University of Pennsylvania and the J L Kellogg Graduate School of Management at the Northwestern University, US. Though it is a positive development, the new biz school is not being perceived as a major challenge for the premier business schools in India.
Executive education: The top management institutes of the country organised training programmes for executives of various levels and disciplines all through the year. The Indian Institute of Management, Ahmedabad, was the most active with several programmes. IIM Ahmedabad even offered executive education in Colombo. But other institutes also displayed a fair amount of enthusiasm in conducting courses. Innovative solutions for managers, how to value shareholders, product creation, and customer-drivenorganisations were among the favourite topics for executive education.
Employee suggestions: Companies formulated their own techniques to train their staff and invent new ways to boost their bottomlines. For instance, Maruti Udyog Ltd saved Rs 75 crore from the changes suggested by its employees. It was an example of how organisations could benefit by taking their employees seriously. Similarly, TimesBank has gained from focussing on a uniform response mode by employees -- TimesBank's response to a particular question posed by a customer will be similar in all branches. Usha International put in place an appraisal system where subordinates assessed their seniors.
Job cuts a dampener: Job cuts spoilt things for many. Ashok Leyland started a three-day week. Air-India staff, too, found their jobs on the chopping block. Bank of America decided to close retail operations in India. ANZ Grindlays restructured its organisation. But according to experts, the job cuts are a short-term phenomenon. Theysay that emerging companies will offer many more employment opportunities.
Well, that was 1998. Hopefully, 1999 will bring some more cheerful news from the financial world.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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