Prime Minister Narendra Modi announcing Rs 500 and Rs 1000 notes ceasing to be legal tenders at the stroke of midnight on November 8 shocked all. Why this decision was taken in a jiffy? What effect will it have on people, banks and Indian Corporate sector? A series of analysis and comments continue to dominate media – print as well as electronic media in a bid to answer these questions.
However, fact remains that this move has deeply impacted the vast sections of our population carving their livelihood while working in unorganised sector. This segment of working society entirely depends on cash and is hardly linked to the banking system. Jan Dhan Yojana may have linked a percentage of them to the formal financial system, but the hassles of utlising the bank account to manage their 'small' money keeps them away from the bank branches.
Amid all this inconvenience, there's an important lesson to learn out of this mess. A person would be now thinking to have at least a savings bank account in his name. Even as opening a bank account is not mandatory, the decommissioning of notes has infused a sense among the masses, particularly those in informal sector, to open and operate a bank account on priority basis.
Having a bank account gives a sense of empowerment as you can have control over your finances. Besides, there are some important benefits to having your own bank account. Government benefits like subsidy on various items are now routed through 'direct deposit'. For accessing these benefits you need to have a bank account.
Using another person's bank account is not an option even if the account holder is from your family. The account holders name should necessarily match up with the name of the person who is receiving the benefit. Therefore, ensuring hassle free access to government benefits etc. through direct deposit mechanism, you must have a bank account.
However, there may be an occasion when receiving a benefit would not be possible through direct deposit mechanism. It is likely you may receive a physical cheque. If you have your own bank account, you will be able to deposit the cheque and then take the money out. If you do not have your own account, you will face lot of hassles to en-cash the cheque. Even chances are that you would not be able to cash it.
Remember, once you get into a relationship with a bank through your account, it's imperative to establish a good reputation with your bank. There are small but very important things which you need to take care while dealing with the bank. Never issue a cheque bearing an amount which is more than the balance in your account. Sometimes it may happen inadvertently at your hands, but frequents incidents of this nature can dent your reputation.
If you need to borrow money from the bank or any other institution, be committed to repay it as scheduled. Paying your debt well on time will make you a star customer of the bank. Once you earn reputation, you will enjoy more concessions and privileges from your bank.
Since technology stands fully integrated into the banking system, having your own bank account would also mean you can access your account anytime and anywhere from multiple locations. And that too without carrying cash. Having your own bank account allows any time access to your money through ATM machines or through Point of Sale machines (PoS).
However, if you are a business man or self employed you should separate your business and personal money matters. You should open a separate bank account for your business. A banking account will definitely boosts your business legitimacy. Having a business banking account will garner more and more credibility for you in your given business environment.
Lastly, you should now chisel your money management skills and help your kids to acquire this skill right now. It is never too early for kids to learn how to handle money. Child's education is incomplete without a few lessons in how to take care of money. It is up to you to see your kids reach adulthood prepared to face life's fiscal challenges. In the short term, they may develop strong saving habits, learn how to make smart purchases, and begin to understand the true meaning of investment. In the long term, they can be helped to avoid accumulating debt. And by teaching the value of saving for the future, you as a parent can help them plan for financial security even amid decommissioning of currency.
(The views are of the author & not the institution he works for)