Liberal-spenders & Big-shoppers, today’s young ‘Millennial’ & ‘Gen X, Y & Zee’ might wonder how parents/elders during the 1960-70s era ran the households and raised kids with considerably smaller mean(incomes) & large joint families. Even in frugal days, our parents facing rising prices would teach us value things by setting examples everyday in austerity, sans ostentation. They made sacrifices to ensure saving of each penny possible that helped us go ahead in life with the right values. Agreed that life then was simpler.
Strong emphasis on ‘thrift’ were at play when we joined banking profession in late 70s. It was the then sacred religion of all bankers (more so, the PSU banks) to practice three magic watchwords– the operating bottom-line, recovery of funds lent and CASA, short for Current & Savings Bank (SB) accounts. SB had its many virtues of being less costly, stable, spread among all sections/ages of people & free of ‘rate’ risks. No wonder, all banks ended up vying for a piece of the Savings cake by offering hybrid-products, linking it to fixed deposits and freebees for maintaining accounts with higher balance. While after the deregulation of Savings interest rate by RBI in 2011, many private banks started offering higher rates, PSU banks continued at 4% rate for long.
Suddenly, SB, the dependable veteran, is not much sought after. The Banks felt that too much Savings has come in and they no longer need to attract depositors with the same force. This has led to an all round free fall of SB deposit rates to as low as 2.5% to 3.0%. More important is the profile and saving propensity of Saving depositors. Ranging from pensioners, daily wage labourers, shopkeepers, vendors to salaried small savers, it’s the segment for whom bank deposits are the only social security they have, to fall back on.
Yet, over last decade there’s been a cultural shift from ‘Saving’ to ‘Spending’ for aspiring, urban youth with higher incomes & vying for flashy life-styles. ‘Saving’ is outdated and indiscriminate spending is fueled by easy, accessible credit (EMIs,BNPL,Fin-tech loans). Lifestyle upgrades (gadgets, travel, dining, branded clothes etc) driven by social media comparison, alongside rising living costs, job insecurity & need to borrow for essentials like fooding, rentals, education etc are leading to debt for consumption rather than asset building. A ‘Spend now, Pay later’ culture has outpaced the income growth, trapping many in huge ‘debt traps’ & EMIs showing the path to early indebtedness for our youth !
Even as far back as in the 16th Century, Shakespeare urging ‘self-sufficiency’ had said in his play ‘Hamlet’ : ‘Neither a borrower nor a lender be’ meaning that one should avoid lending or borrowing money as heavy debts can strain relationships and create financial burdens. In today’s quick-fix digital world, borrowing short-term is route to meeting out even day to day expenses but comes at very high cost. Old phrases like ‘Cutting your coat according to the cloth’ still hold good. Savings, in whatever form do become our lifeline ! Not just profligate people, nations spending more, need to control their ‘Fiscal Deficit’ !
Working on Living 