Banking out of recession!!

I have a new theory on how India escaped recession. It's the banking system which should get the credit.

No, not the international banking system which spent all our money (and more) in the belief that even bad debt is a good investment.

It's the banking system in India - the federal Reserve Bank of India, the state banks and private banks - which ensure a strong capital base by actively discouraging customers from spending their money.

The first inkling came last week. I was trying to pay for a hotel we had booked on New Year's eve and the internet portal of World's Local Bank told me "Cannot transfer this amount as you have exceeded your limit".

I wondered how an expenditure of 9,000 INR rupees could have exceed my limit. More importantly, I was outraged (even embarrassed) with myself for having taken such a stupid limit on my transactions.

Called up the "Happy to help you" call centre and was told that the limit has to be set up before any electronic transactions could happen. Don't worry, you put in a request and it'll be done within 3-4 days. But this is my own money. Why do I need permission from you to spend a very small bit of it? Sir, this is for your own security. But isn't the security ensured when I come in through a login, a password and a random number generated by my very own unique ID device? It is, sir. But it is possible that someone could get their hands on these details and try to steal your money. But isn't it logical that if someone was so determined, he would put a gun to my head and march me to an ATM? Sir, I can't talk about that. We are doing this for your own security.

In the end, I had to walk into the World's Local Bank's Not So Busy Local Branch and wait for 30 minutes before someone took my request for a transfer limit. Do you want this facility set up over the phone too? Why would I want to do that? Isn't that a risky option? The lady smiled and offered another form to make an immediate transfer of 9000 INR to the hotel concerned.

The hotel done, I got busy booking the flights to my destination and back. The budget airline was really efficient and allowed me to hold three seats at my preferred fare for 24 hours, over the phone. However, the guy on the other side could only accept payment from a credit card. Don't worry, you can get on to our site and use your Debit Card there.

At the first opportunity, I got on to the internet and tried to confirm the booking. After filling in the relevant details and submitting the form, a message appeared: "Unfortunately, the transaction has been declined by your bank". I took it as a one-off failure of the system and tried to pay again. It came back with the same message.

Happy to help you call-centre guy told me this was because the Reserve Bank of India doesn't allow internet payments by Debit Card. So what do I do, I asked him. The best suggestion was withdrawing cash and paying for the flight in cash. But all the ATMs around me only allow a maximum transaction of 12,000 INR a day when I need to pay nearly 50,000 INR.

I asked to speak to the supervisor, and she was the usual pleasant-mannered but unhelpful sort. Her standard line was Reserve Bank of India does not allow electronic transactions and we have to abide by it. As I ranted about how there was nothing international about this bank, I could picture her filing her nails and making faces at her colleagues. My sad tale of inconvenience only got lonng bits of silence from her. Maybe we can offer you a credit card? Why would I ever be interested in another card from you, when the first two are causing so much misery? In any case, that will take its own sweet time and doesn't solve my problem.

For a moment, I thought of asking friends-with-credit-cards for a favour. But not many of them have 50,000 INR knocking about after mortgage, car loans and other expenditure. So, the best option seemed to be to go to Delhi's Local but Quite Busy airport to pay for my tickets. The card is accepted at merchant terminals, the bank had told me.

But just like a six-year-old told off by the trustees for going way beyond his usual candy-and-soda allowance from the well-resourced trust fund, I wanted to be sure. This time the happy to help you girl told me one of my accounts allowed a maximum daily transaction of 40,000 INR and the other 50,000 INR. Which meant I would have to split the payments between my two cards.

As I drove to the airport, I wondered what made the Reserve Bank of India come up with such a brilliant idea. It stops the good guys from spending their own hard-earned money. The bad guys continue to use cash liberally to buy services with coming under the radar. It was only a few months ago that a story appeared of an associated of a tainted political depositing 6,400,000,000 INR in a Mumbai bank branch. Neither the Reserve Bank of India, nor its stringent policies of monitoring cash flows, seemed to skip a heartbeat at this transaction.

But then again, this guy was depositing money into the system and not attempting to take it out. And with that kind of cash flows, the worst of economic recession can seem like just a minor inconvenience.

My phone from the government-owned utility arrived, by the way. The guys were working on Saturday and even though they arrived at 1500 hrs (as against the promised 1000-1200 hrs), the installation was smooth and the phone is still working.