Faulty Bank Notes From ATM

Other day I came to know about an interesting as well as a bit disturbing incident from one Mr. T.

While we were driving from R.K. Puram to Gurgaon in his white Santro (if I can remember the car model correctly), he told me that other day he had come across a somewhat shocking experience. He had drawn three bank notes of Rs. 500 denomination from a Gurgaon-based ATM of a reputable private bank (an Indian bank to be precise). Later he found all the three notes to be faulty, and he failed to use any of them. The net result was the loss of Rs. 1,500 (sorry for using the outdated symbol of the Indian rupee).

I asked him whether those notes were fake. He said that they were not exactly fake, but were so faulty that nobody accepted them. While I could not exactly follow what he was trying to say, I could manage to understand that those notes were at least not fresh notes but used ones.

And if we find that we are getting used notes from ATM, that alone is quite startling (even if the notes are otherwise OK and can be used).

So I felt that people must know about the incident, and so decided to share the same through this online medium.

Do not get me wrong. My intention is not to create panic. In fact I am myself not sure about exactly what was wrong with those notes. I just wanted to make people aware that such thing may happen, though it will certainly be a rare case.

The Possible Hike In EMI On Bank Loans – My Question For The Indian Banking Fraternity

With the Reserve Bank of India (RBI) hiking the Repo Rate, there has naturally been a possibility of commercial banks hiking their rates of interest (i.e. EMI) for various categories of loans, including car loan and home loan.

Despite being a layman with little grasp of financial issues, I had no problem in understanding the direct relationship between a hike in Repo Rate and a hike in the rates of interest for the loans provided by banks. In fact it is an issue that anybody will find to be crystal clear.

However, there is something that I will like the banking sector mandarins to take note of.

If RBI has hiked the Repo Rate, then it has also hiked the Reverse Repo Rate, right? Therefore, at the end of the day the matter is back to the square one, with neither a gain nor a loss for banks.

And in that case, the banks should not hike their rates of interest for loans. Because if a hike in the Repo Rate has caused a “compulsion” for them, then at the same time a hike in the Reverse Repo Rate has caused a “dilution” of that “compulsion”.

Yes, am I wrong in my analysis?

I came to know that the hike in the Reverse Repo Rate might result in a hike in the interests offered by banks on fixed deposits. Well, I do not think that will be of much help. Because the income made from the interest on one’s fixed deposits is taxable, and the tax will increase with the increase in that income.

The middle class is more interested in a less taxing EMI. And therefore I will humbly request banks to try to retain the present rates of interest on the loans offered by them.

Yes, they are welcome to change it, if they reduce it (just kidding).