Category Commerce

      The most important argument in support of demonetization is that the process will help curb financial malpractices in the country.

      This includes money for which tax is not paid or in other words, black money. It is believed that a considerable amount of black money is stored in denominations of 500 and 1000. Hence, by making them invalid, users will be forced to get rid of them. This will also help the government to find out the sources of black money circulating in the country.

       As per the data from the Reserve Bank of India, the supplies of banknotes in all denominations have increased by 40 per cent in the past few years. But the number of currency notes in the denominations of 500 and 1000 has increased more than that. The reason given for this is the use of counterfeit notes.

      These notes are used for many illegal activities like drug trafficking, financing terrorism, corruption etc.

      Demonetization is also expected to fight such crimes too.

      Besides, the process takes India a step ahead to the digital world. So in spite of the difficulties, many economists say that demonetization will help the country in the long run. 

          One of the biggest arguments against the move is that violators and tax evaders do not always hoard money in 500 and 1000 notes- most of it is either in the form of assets or investments. In the case of liquid money too, they could possibly be deposited in the Swiss banks, or in other banks through false accounts, or benami accounts. Hence, critics believe that black money cannot be totally controlled with demonetization.

          Yet another complaint is that there was not enough planning, or time given before making such a historic change. Such a sudden and drastic move as this in India has caused much inconvenience to the people.

          People in many parts of the country, especially in rural areas, had a tough time as they could not exchange their currency immediately. There are villages without banks, and people without bank accounts.

             Banks and other financial institutions were running without enough currencies of 100s, or the new 2000s, to give in exchange.

             People in hospitals who could not manage to get the equivalents, were among the worst affected.

             Even as demonetization intends to wipe off financial malpractices, many fake notes of the new Rs 2000 note were found circulating immediately after they were introduced. This made it clear that counterfeiting is still possible.

          Canadian dollar is the fifth most valuable reserve currency in the world. It has also become popular among the central banks all over, thanks to the country’s strong and stable economic system.

          One of the major attractions of the currency is the presence of the imagery of a bird called loon on the one-dollar coin. The Canadian dollar in general, is nicknamed as ‘loonie’ for this reason. The first loonies were circulated on June 30th, 1987. Interestingly, when the two-dollar coin was introduced in 1996, it was called ‘toonie’, referring to ‘two loonies’.

          In April 1871, the Canadian Parliament passed the Uniform Currency Act which replaced all the other currencies with the present day one.

          Set up in July, 1934, the Bank of Canada acts as the central bank in the country. Under its contract, banknotes are printed by the Canadian Bank Note Company, and coins by the Royal Canadian Mint.

Think of a situation in which you have no place other than your home to keep your valuables like money, jewellery etc. It’s tough!

But there was indeed such a time in history when people did not have many safety options. It was at this time, sometime around the 3rd century BC, that temples in Mesopotamia started accepting precious things from people for safe keeping.

Since these temples were already wealthy, they could also give loans to the needy. It is believed that the first steps of banking began here.

History notes that there were ‘grain banks’ in Egypt to store and loan grains, which were as important as currencies. Under the rule of the Ptolemies, government granaries formed a network of grain banks to help people. They also had a central bank in Alexandria to keep a record of transactions. This acted as the first governmental bank in the country.

Later, during the Middle Ages, trade and businesses started flourishing, and people earned more. It was then in Italy that moneylenders began to set up stalls called ‘bancas’. The idea was to accept coins and exchange currency.

In 17th century London, banking began when people deposited currencies and gold with goldsmiths. This was because the goldsmiths already had safes and locks, so they thought their valuables would be secure there. Slowly these goldsmiths started moving from town to town to transfer money. Later, they came to be known as goldsmith bankers.

        We all know that a bank is perhaps the safest place for us to keep our valuables. But have you ever wondered how they work? Let’s find out.

        For any favour that you seek from a bank, you need to open an account in the beginning. You deposit money in this account, which later goes into a larger pool of money that is formed by similar deposits.

        To give you more details about your account, the bank officials will issue a pass book, and a cheque book.  The latter helps you withdraw money from the account.

Continue reading “How do banks work?”

         Every bank offers different kinds of accounts for its customers. Some of them are the savings account, fixed deposit accounts, recurring deposit accounts, and current deposit accounts.

        The most popular among the four is the savings account. Here, if one deposits an amount, he will earn a small interest from the bank. The user is also free to withdraw money from it whenever needed. But the withdrawals are subject to certain conditions.

        In the case of fixed deposits, the deposited amount has to remain in the account for a fixed term, say five years. This account is used mainly for saving larger sums of money. The interest a bank gives for this account too, would be more.

        Another type is the current deposit account, meant mainly for businessmen. Here, there is no limit for depositing or withdrawing money.

        Recurring deposit accounts are for smaller savings. They are used by people who deposit a specific amount for a small period, say six months or one year, and earn it back with a small interest.