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Tuesday, September 04, 2007

Despite the complexity of the products, the processes are simpler. Like the joy of driving a superbly crafted car

Indian Express Express Money Uma Shashikant August 13, 2007 60 years, 3 generations, the journey begins...Grandpa lived through the trauma of a pension-less retirement. Dad filed accounts meticulously. ATMs and investment choices gave me my financial freedom. I wonder what will do it for the kids
A peek into history always brings back memories of granddad and dad — the two people who influenced me the most. Thatappa (as we would call granddad) had to draw out of his PF for his daughter’s wedding, and lived through the trauma of pension-less retirement. In his working years, he did a second part-time job, to fund his children’s education. Appa (as dad was called) did monthly home budgets, wrote daily accounts, tallied the home cash box and filed all the papers of his life. If both of them were alive today, they would be amazed at the ATM, credit cards, Internet accounts and the variety in my investment portfolio. The options we have today and the efficiency that accompanies our financial transactions is the beautiful freedom we enjoy.
There was a time when one called the broker on the phone, placed an order, and dealt with ‘patawat’ — the day when bundles of share certificates were brought to Dalal Street, physically counted and exchanged. The electronic trading screen has meant that we can participate in the market and get the best prices, without having to wait for 45 days before the share certificate came by post. These delays not only cost money, but also provided ample scope for cheating. Thatappa was worried in my post-graduation days that I was joining a group of gamblers in the stock market. In the first boom that I saw in 1985, most of us had paper profits, which we could not book, because of the damning process and paper. The demat account has meant freedom from frauds for so many of us, and efficiency in participation. I have little doubt that fruits of the India growth story would have bypassed most investors if not for the electronic screen and demat revolution. There is still ground to be covered to enable most of India to reap the benefits of our modern capital markets.
In Thatappa’s time, they dealt with bankers with awe. Bankers seemed to own all the deposits and have tremendous powers to give loans. Thatappa wanted me to become a bank officer. Growing up in times of loan melas, where bank managers meekly lent to those that politicians chose, I refused to take his suggestion. The surge in retail lending, ATMs and technology that enables us to transfer funds instantly have meant so much of freedom for all of us in the way we deal with the bank. Credit cards, personal loans and home loans have restored the power of the customer and banks compete to give us loans. Appa would have been amused at the mailers and phone calls from selling agents.
Back then, there was little money to save and investment options were few. The choices came only in the 1960s, after UTI was formed, banks were nationalised and forced to go rural. Then, there was always the preference for income, which made several choose chit funds and company deposits, some of which defaulted. If I bought him shares, Appa always asked what the dividend would be. The shift from income orientation to growth is the freedom we enjoy. From a time when salaries were not adequate to finance the family’s needs, many of us enjoy the ability to save, to invest and to make our choices from a range of products that offer growth. We make financial plans, save for our goals, and are serious about retirement plans. Thatappa will approve. We can also do all of this with tremendous ease. Appa would be surprised that mutual fund transactions can be made by signing a small transaction slip and confirmed by account statements that have no signature. He would still file them, all the same.
The freedom today is precious because it unfetters the way we earn, save and invest our money. Despite the complexity of the products, the processes are simpler. Like the joy of driving a superbly crafted car, confident that it has been assembled by the best minds, knowing nothing more than the brake, clutch and the accelerator. A demystified product is a joy to use. While I cherish the freedom we now have, I wonder what my children will say 25 years from now. To the generation that thinks money is produced by the ATM, that anything can be bought with credit cards, and to whom home budget and daily accounts are unheard terms, what will financial freedom mean? And how will attitudes towards the less fortunate be shaped? What will their freedom be and how will they cherish it?
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