Banks

Walking down on the streets of Mumbai, one thing I did notice was that the number of bank locations had exploded. I could spot atleast 5-6 banks in a stretch of road less than a mile. These are retail banking outlets and not merely ATM centers offering personal bankers, cash counters, loan facilities etc.

I was in the US till a few weeks back and was constantly informed by varied news sources that the banks were in trouble. The confidence amongst banks was low, and they had accumulated a lot of bad debts (as different products). The market capitalization of the US banks had come down precipitously.

The sprawling vehicle friendly roads of the US, can explain the sparsely located banking outlets. In Mumbai, it is surely very convenient to have a bank just down the road, and one certainly doesn’t mind options in choosing which bank. However I do wonder in this world where more and more functions are moving online, how often does one really need to go to a retail banking location? Many times I answered, as I pushed two people in the crowded bank to reach my personal banker.

There is no denying the utility of having many-many-banks-and-all-next-door. However when a Bata outlet has to compete with banks for retail space, one can sense something is not quite right.

Confusing currencies

Been in India for four days and the USD - INR chemistry confuses me.. A dollar can fetch you an record high 51.4 rupees. The way I understand this is that rupee has never been weaker, and the American goods never more expensive..

Couple of days back, I went to a local Chemist in Chembur to gather up the stuff for shaving as I had little space left to pack it all from the US. The following were the purchases

AXE deospray 150 ml - Rs 165 (which converts to $3.2)
Gilette foam - 250 ml - Rs 225 (which converts to $4.36)
Mach 3 turbo - 4 blades Rs 425 (which converts to $8.25)

I used to buy these items at pretty much the same price at Target in the US. Back in 2004, someone mentioned that the buying power of the dollar was 10 times that of the Rupee. Well logically it should be 51.4 times, shouldn't it?

The reality is that India and most of East Asia is crowded with American brands like Gap, Gucci, Levis etc. People in the states get fat discounts on a lot of these items. In the days of recession, the discounts are very deep sometimes exceeding 50%.. On the other hand, most outlets in Mumbai charge full retail price (converted to Indian rupees).

There is no doubt that the western goods are super-fashionable and of very high quality, and hence worth the price. What confuses me is that in a global village, the prices are not flattened to the local buying power.