It has now been over 5 years since I moved back to India after 5 years in London where I worked in the bylanes of commodity trading and interest rate swapping.
In the years that I’ve been here, I have had the fortune of interacting with people from all walks of life — something I did not do much of when I was living the city boy life in London. And by walks of life, I mean people from practically every socio-economic bracket one can envision.
I have interacted with the poorest of the poor, who have nothing to their name. Hell, in some cases, these people did not have a single piece of ID which pointed to their name, date of birth or even where they were born. At the other end of the spectrum are the richest of the rich — often educated abroad, these folks can afford practically anything, and they are not shy of splashing out on items which I consider ‘wasteful expenditure’ — lamborghinis, ferragamo belts and colognes that induce a coughing fit if you get too close the person wearing them.
Old Spice does it for me, thank you very much.
(and for the ladies apparently)
Of course, one learns a lot and develops an immense amount of compassion when you take the effort to delve deeper into people’s lives. Not at a surface level — I don’t mean likes, dislikes and so on.
I mean getting to know them well enough so you can understand the motivation behind their behaviour — the ‘why’ that seems to be driving every decision and move that they make.
Consider the following scenarios:
Amit has moved to Bangalore from his home state of Bihar in north east India, as there are very few opportunities there to earn a livelihood. He has left a family of three — a wife and two sons, and also has a mother back home who is dependent on him for her basic needs. He gets a job in Bangalore as a driver, and makes it a point to send money back home every month. Of his salary of Rs. 15,000 per month, his monthly budgeting is as follows:
Payment of loan taken for sister’s wedding — Rs 3,000 ($45) per month
Living expenses — Rs 4,000 ($62) per month
Money to be sent home — Rs 8,000 ($124) per month (the balance)
Amit has not been able to open a bank account in Bangalore, despite being resident there for over 3 years. When his employer asks him why he does not yet have a bank account, he comes up with many reasons; chiefly, that he doesn’t have the right documents. Every time Amit approaches a bank branch to open an account, he is turned away for not being able to present some official document or the other. Basically, the real reason that Amit has not been able to open a bank account is that banks don’t see him as being a profitable customer, and therefore can’t be bothered with wasting time on him.
As a result, for the money that he needs to send home, Amit asks his employer to draw a cheque in the name of his wife, which is then transferred directly to his wife’s account a few days after he presents the cheque to the bank. The remaining salary is paid to Amit in cash — which he uses for daily expenses and the repayment of the loan.
Amit has very little knowledge of the financial system, especially about how banks operate. He is able to read and write only in Hindi, while most documents in Bangalore are either in English or in Kannada. Amit had not heard of the concept of compound interest until his employer explained it to him. Of course, he was stupefied that money could ‘grow’ like that.
Remember the loan I mentioned earlier? Amit pays an amount of Rs 3,000 ($45) every month on a loan of Rs 60,000. So he pays 5% of the amount loaned to him every month as repayment. The only catch here is that this amount is the interest portion on the loan. Do you want to work out how much this works out to in terms of an annual interest rate? He thinks this exorbitant rate of interest is ‘normal’ — after all, every person in his village is paying the same rate. Only when he pays an amount greater than Rs 3,000 does the moneylender start deducting this from the principal.
Amit has only ever heard of stocks and fixed deposits. He never has any amount left over to ‘invest’ though. After all, it takes Rs 5,000 ($78) to start an account, and if that is going to be an amount he can’t ever touch (it is the minimum balance which has to be maintained at all times), then what is the point?
He is happy the way he is.
How do I know all this? Amit works as a driver at the school where I also work.
Raju is a Pakistani living in Dubai. He works sixteen hours a day, seven days a week. He has 3 jobs. Well, not quite. He has one job, and numerous side hustles.
The first job is one that starts at 4 am and finishes by 11 am. He is a sweeper and is employed by the Sharjah Municipality. Although the nature of his job has changed since more mechanized methods have been introduced, he gets paid a salary which most people in the developed world would not get out of bed for.
His second and third jobs are at the homes of Asian expats. Where he cooks or cleans. He works at an average of 7 houses at any one time. This is of course illegal according to the laws of the country — if you are there on a work visa, you can only work at the job that the visa entitles you for. But Raju is a hustler, and is fully aware that he can get deported if he gets ‘caught’. Yes, there are countries on this planet where working hard is a crime!
Raju has been in the UAE for over twenty years, and has gone back to Pakistan just six times in that period. Two of those trips were to get his daughters married. His life is tough, but he feels proud that his children are the first generation in his family to all have a college education. All because he worked hundred hour weeks for over twenty years in a country where people of his background have never been treated well.
Raju, like Amit, sends money back home every month. He uses one of Pakistan’s most famous banks for this — and according to him, it is the best way for him to transfer money back home. The only catch here is that Raju has absolutely no clue that his bank is ripping him off. They give him an exchange rate which is so unfair, most financial professionals would laugh at it. Added to this, they demand that Raju keeps a minimum balance in his account at all times, and that his wife keep a minimum balance back in Karachi. Inadvertently, Raju is losing out every month in the following ways:
- He gets a very bad exchange rate to convert Dirhams into Rupees
- He has to keep a certain minimum balance in his bank all the time, and he can’t use this money
- His wife has to do the same — keep some money in the bank but she can’t use it as it is a minimum balance
How do I know about Raju’s circumstances? He used to come in twice a week to clean our home in Dubai. Not that it is relevant to this post, but Raju made the best biryani I have ever had.