Bank

Principle business of a Bank is pretty simple to understand. It borrows and lends. You and me, the customers of a bank are the biggest lender to the bank. We deposit our money in our bank accounts. The biggest borrowers from the banks are industries, followed by households. Banks, thus, are middlemen. However, unlike the accepted meaning of middlemen, presence of a channel like bank is a must. Banks, in fact, can even even be termed as contemporary ethical साहूकार . As banking is a business, it runs for profit. Banks earn profit employing the good old principle, that Selling price less Cost price should be a positive quantity. In other words, the rate at which bank lends money to its customer, you and me, is higher than the rate at which you lend money to bank. The difference in rate accounts for earnings of the bank, and is the source of salary to its employees and other sundry expenses. The balance amount, after it, is Profit.

Banking, perhaps, is the only business that runs purely on trust. We entrust banks to guard our money that we lent to the bank. Those who infer that banks are a surrogate source of income, derived from interest on deposits, dwell in fantasy land. Except for fixed deposits, the rate of interest on any other bank deposits is always less than the rate of inflation. So, technically, one pays to the bank to keep their money safe; from robbery.

Now, does this mean one shouldn't keep any money in banks? Wrong. One must. Monet and Mind have one thing in common: Both are rendered useless, if kept lying idle. A part of one's fortune must be parked in banks. Rest can be invested into other monetary instruments, including stock, bonds, mutual funds, property, et cetra. The reason for keeping money in banks, especially in checking accounts, is for its easy liquidity, i.e., the funds can be accessed swiftly and with ease. Any other investment avenue doesn't provide similar ease for liquidity.In fact, they can't and should not. Why? Those are investments!

A common misconception about - and for that reason, most financial institutions - is that they have some magical means to multiply investors' money. No one bothers to care where from the interest on deposits is going to emerge from. Profit is a function of efficiency. Either reduce the denominator or increase the numerator. Cut the operating cost or increase the production for same cash inflow. Profit margin is an implication of growth in primary businesses (read agriculture). The ripple effect reaches up to the end consumer, via a series of traditional middlemen. Lesser such middlemen, higher is the amplitude of the ripple at the receiver's end. Retail business will, hence, do more good to consumers and farmers, vis a vis traders.

Any business needs seed capital and till it reaches break-even, some credit। Bank loans are the primary source of such capital influx. Stock markets and Venture Capitalists are other viable options. However, they mostly come into play in big-ticket investments, for such ventures offer higher profit margin, although with high risk factor. Now, if banks are to lend funds to businessmen (and us), obviously, banks itself needs funds. There comes in our deposits. Many depositors, educated or otherwise, feel that banks have a डब्बा in which their money is kept sealed. Whenever they withdraw, the डब्बा is opened and then resealed. In other words, people confuse bank accounts with तिजोरियाँ shown in Hindi films. Never watch Hindi films!

In reality, banks are more desperate for lending out their deposits, for the simple reason that banks lending rates are higher than bank's borrowing rates. Additionally, keeping money idle is akin to keeping a gas burner lighted without putting any vessel atop; waste of energy. The same money, if used for creating permanent assests, viz. roads, rails, bridges, power stations, dams, canals, et al, will results in appreciation of its value; a penny spent today is better than a pound saved for morrow. Moreover, as such projects have high gestation period, the loans are long term and hence promise assured higher return on investment. Stock markets work on smae premise. However, instability is its inherent attribute. Retail investors and financial institutions alike, misuse markets for making quick buck. Markets by definition, may be for trading, but ideally should be for investments.

Bottomline is: Park your money is banks, invest in securities, splurge on your spouse and if you still have balance left, gift it to me!

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Trivia:
I found following trends in the Forbes 2000 biggest companies in the world list-

1. Topmost company belongs to Banking Industry.
2. 4 out of top 10 (40%) companies are from Banking domain.
3. 16 out of first 50 (over 30%) are from Banking domain.
4. 210 companies out of a total of 2000 (over 10%) are from Banking domain.

Teachers

I always had fabulous teachers. When I was of little (use, size, importance) age, I had a few scary looking, but (reaffirmed repeatedly with as) warm hearted teachers. Parents tell, I was a horrible student, not from the perspective of results but, from my insatiable queries regarding apparently everything visible around. Mother keeps telling me the (horror) stories my teachers used to confess to her in Parent meetings. With time, I grew, inasmuch as the level of inquisitiveness did.

Don't know why and how (and what for), I managed to be the top ranker in the school and later, the college. The teachers were always happy with me for this. Perhaps, only this, for my questions, mostly mistimed and rather embarrassing, always used to make them uncomfortable. I remember once asking innocuously about the process of reproduction employed by the winged vertebrates, when the teacher was attempting diehard to altogether skip that not-so-socially-discussable section of the chapter. The teacher had silenced me by asking to meet her, in person, post lecture. In collegiate times, I met some of the most hilarious persons in the namesake of teachers. A few of them were the just passed outs. They were employed to teach us for the simple reason of them being too unintelligent to be employed even in Indian IT companies. Some others were well-settled housewives who had decided to teach us, for it rendered them a handsome shopping credit, over and above the handful sum their (respected and respective) husbands would have ever entrusted them with. In my professional life, I was imparted training by such people at times who knew much little to me and hence frequently lauded me, so that I can talk with the chalk, while they amused themselves with the my pretty colleagues.

Teaching, unfortunately, requires knowledge. Degree, though are the minimum guarantee of an individual possessing a specified set of skills, however are not so reliable. I have experienced a few heavily qualified people who were (and still are) unable to teach trivia, while a few (read rarest of the rare), who could teach Object Orientation without a book and using just plain English as an aid.

The regulations on Universities command that a lecturer must be a Masters at minimum, while PhD is recommended. In the booming economy of India, any one with a right degree is getting a job. They may or may not deserve it. A very insignificant fraction of graduates choose for post graduation. PhD is rare. Where will then Universities fill the vacancies from? Simple. Majority of such people, who were good for nothing and hence had to choose higher education as the only recourse.

A few people do take teaching as the full time career. But their percentage is too little to accommodate the demand. Additionally, opening a Coaching Class has become a more profitable business model, lately. Students derogate school faculties and join a coaching class. Later, they derogate that coaching and join another. The Coaching Business foster, the Universities perish.
And this march to perdition is pretty convincing. Teachers are, unarguably, the principal factors in deciding the reputation of the college. The placements, as a metric, is a function of the quality of the teachers. The better are the teachers, the better are the students. A company recruits the best. They want value for money!

So, to fuel the economy with fresh blood and sharper intellect, teachers play an quintessential role. What do they get in return? Peanuts. For record, the salary of the Dean of IITB is, on an average, 10 times less than the highest CTC offered to the BTech graduate from the same institute. That, of a small time ad hoc lecturer in some B class city should hence be calculated proportionally.

In pristine India, the teachers used to live a austere life in a rather skewed locale in jungles imparting knowledge to the wards, while the wards being available as the full time utility boys. Neither can we expect anyone to do so today, nor should anyone do it. Especially, when wards value teachers only for a recommendation letter and not for the knowledge, and when regulations warrants minimum educational qualification for being employable but not for (minimum) respectable pay cheque.

Education is not a joke. Nor are the teachers. We allocate 4.1% of the GDP for education. Not all is spent and a substantial portion spent is to accommodate Reservations. Why not accept teaching as a profession and teacher, consequently, as professionals? Lets pay them at par, respecting their contribution and not just pay them with truck loads of fake respect, for respect can never be paid; it is always earned. In the event of we paying them scantily, we will continue to get horrible students like me, who has been laughing all his lives on them, for a reason, now much obvious.