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Sunday, November 18, 2007

My teenage investment experiences

Recently I’ve started experimenting with shares. I’ll write about that later. I had a quest for saving since childhood, mainly because of my mother. Sharing some incidents/experience in this regard.

A FD of 1000 Rupees (Sometimes in year 1996-97)
I studied in a residential school, known as Jawahar Navodaya Vidyalaya. My parents used to visit me once a month (as per school regulations parents could visit only once a month-all those asects warrant another story altogether). While school used to take care of most of the generic arrangements-food, stay, textbooks, notebooks etc we had to spend money only when we needed things not provided by school. For this reason our parents use to leave a small amount with us so that we can get things if needed urgently through school office attendants who would get it from town for us.

Our school was dealing with Hebri branch of Syndicate Bank (now I guess they have closed business with Syndicate Bank and have shifted account to some other bank, for a reason not officially known) and I managed to open a Savings Bank account there (I’m unable to recall if I opened a new account there or transferred my earlier account).

One day, I took permission from Principal and went to town and entered the Bank. I had saved around 1000 Rs from my pocket money and wanted to open a fixed deposit. Bank staff simply refused to open a FD for such an amount. (Rs. 1000 may seem like a small amount today. But a decade ago, I’d saved that amount from my pocket money and that had taken around 9-12 months or more to accumulate that much). I was determined to get better returns on my savings and wanted to create an FD for an year (One year and 1 day to be precise, because interest rate was higher if the term was 'above one year') so that I get more than twice the interest I would otherwise get in savings bank account.

But the bank staff was insisting Rs 1000 was too small to open a FD and suggested that let it continue in Savings account only. I insisted that technically they can open FD for that amount. After some discussion, even escalation to manager and influence (that a family member works in the same bank) I was allowed to open the FD. I got the Vikas Cash Certificate (VCC) (Syndicate Bank’s name for FDs) which showed maturity value some 110 rupees more than what I’d paid, in a nice plastic envelop with Syndicate Bank's name and logo (a faithful, friendly dog) on it and I was a happy man finally.

These days many banks have stipulated minimum of Rs 10000 for FD and my first FD experience is still fresh with me. I’ve been renewing this FD after every maturity and I may never be able to encash it, since my current signature is extremely unlikely to match with my 10 year old signature.


Denial of Student account at SBI N R Colony Branch
Once my engineering studies started I needed a bank account in Bangalore. My uncle took me to State Bank of India (SBI)’s N R Colony branch in Bangalore. The branch manager refused outright to allow me to open an account. His arguments were that students never keep any money in the account and don’t even maintain minimum balance and running such accounts will be a loss for his bank.

My efforts to convince him that I will comply with minimum balance requirements and other guidelines went in vein as he was just not willing to listen.

He was probably right that it is seldom profitable to run student accounts. But what he missed was the opportunity to get a new customer for life. Someone who will be a student for 4 years will be an earning professional for another 40 years. Turning someone young away because of the probability that his/her account may not generate enough profit will significantly reduce the probability of he/she ever patronizing the bank again in rest of his life.

Eventually I opened a student account with UTI Bank (Now AXIS Bank) Bsk 2nd Stage Branch. Some staff there used to remember my name and call me by name and ask about my well being etc every time I visit the branch. It was such a good experience dealing with them (Now those executives who used to recognize me by face appear to have been transferred, and new staff do not remember anyone by name, probably because now they have several thousand customers while when I opened the account there I was one of the first few customers for that branch)

I do not mean to say SBI is bad. They’re modernizing and providing good service. But here n there you’ll still find few short sighted officers who think bank is doing a great favor to you by allowing you to keep your money with them.

Every time I get an unsolicited marketing call asking me if I’m interested in SBI credit card, my first encounter with SBI Manager flashes back


IPO
Syndicate Bank came up with IPO sometimes in mid 1999 and for the first time I felt like buying some shares. I hardly new anything about IPOs that time (except that one gets shares at cheap price that way). I had few hundred rupees in my pocket and I simply went to a Syndicate Bank branch and asked a staff there “I want to invest in IPO”. That staff was taken by surprise but soon recovered and gave me couple of application forms (those blue colored oversized papers) and told that I have to apply for min of 50 shares and make full payment in advance. After the issue closes it is possible that few shares will be allotted to me too. (Depending on how much it has been oversubscribed).

I had enough money to buy one or two shares but not enough for 50 of them. I came back empty handed.

Now when I look at Syndicate bank’s shares I occasionally think how much profit I would have made if I had bought some shares through IPO.


Student Bank at JNV
Since there were incidents of money theft among students in our residential schools we had formed a student bank. I was single handedly heading that bank for more than an year.
Bank used to open once a week. Students used to submit the money with the bank, or withdraw it, I used to make a ledger entry to that effect and ensure that actual cash and cash as per cashbook entry does tally and close the bank and keep the money at secure place in principal’s chamber. I had plans of keeping this money with the local bank and get interest on it but school staff said NO, citing administrative concerns.


Related: ICICI Cashback Offer: Probablity of getting 100% cashback

Also read: My teenage journalism experiences

10 comments :

Anonymous said...

Loved reading your childhood brush with finance. How are you doing these days? Good luck!

Shrinidhi Hande said...

I'm doing fine. Thanks.

Raveesh Kumar said...

Cool, I did not know that you opened FD when you were in Navodaya

Shrinidhi Hande said...

Nice to see your comment after a long time Raveesh...

Anonymous said...

Wow man u were decades ahead of me.
i did not know anything much about FD, IPOs, Shares during 90s..
Good Nidhi.. Was it your idea of making a student bank??


JOJO

Shrinidhi Hande said...

No. It wasn't my idea as such. A need for forming the bank was felt and I think I volunteered for it.

vijai said...

sir,
i beleive lot of SBI branches are opening "0" balance accounts for salary people and also with lot of facilities like ATM card with pin number personal name printed cheques and even internet kit etc at the time of opening.
i don't know why that bank official miss your account
vijai.

Shrinidhi Hande said...

Vijai,

Situation today is different from what it was 7 years ago.

Also, zero balance salary account is the latest battlefield for banks.

I was denied a student account by a particular manager sometime in 2001 may be because all student accounts he authorized so far were running without minimum balance (hence in loss)

hari said...

Yes, SBI is definitely very rules-oriented, but at least they are relatively safe.

In today's scenario, I wouldn't trust private banks a bit. Even putting your money in Mutual Funds seems a better option and with greater returns.

Shrinidhi Hande said...

Agree with you.

Not only SBI but most of the national banks have significant number of staff who think a generation backward.

And Yes, MFs are great...