Pappad and Pickles

Pappad or Papadum or Happala is a food item that comes in many shapes and sizes. It is made from several ingredients and is a supplementary dish used with lunch or dinner in many parts of the world, especially in the Indian subcontinent. Just as its variety, it also comes with many spellings. The picture given above may explain the item better than words. Pappad is typically made from gram flour with many ingredients added up depending on the seasonality, availability as well as taste requirements of users or makers. It is prepared, dried in the hot sun or shade, and stored until time of actual use. It is mostly fried in oil or cooking medium before being served hot. Some variants are also spread on burning charcoal. It should be consumed within a few minutes or hours of it being fried or heated. It is used as a side dish and very popular with children and aged alike. In tropical areas, it is prepared in summer for use throughout the year. Pappad making is a home industry in many parts of the world and provides employment as well to many workers in the unorganized sector.

Pickle is another item that is consumed with lunch or dinner. It has many variants like pappad and adds taste to other items. Its preparation and ingredients varies in different parts of the world. Lemon or raw mango pickles is very popular in Indian subcontinent. Cucumber or similar vegetables are used in some parts of the world. Serving pickles is easier than pappad as there is no processing required before serving. The ingredients are mixed with chilli powder and other spice powders and preserved in vinegar or brine (salt water). Properly packed item can be served directly from glass or plastic bottles. It adds variety to other cooked food items. Pickles are also good for spreading on bread of any type and can substitute fruit jams for diabetics. A small ball of butter is always a wonderful combination with pickles. One should not worry about cholesterol on such occasions. Forgetting unwanted issues while consuming these items is indeed a virtue, at least while consuming them.  

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A close relative wanted to invest in gold recently. The galloping stock markets did not provide any comfort as a collapse may be round the corner at all times. Investing in gold appeared to be the best bet in present times. Notwithstanding eye catching advertisements by innumerable gold outlets, she preferred to buy gold coins. Making charges and wastage calculations were uncomfortable for her. Any appreciation in gold value was swallowed by these subtle disguises while selling the ornaments. I had tried to sell some gold coins to her while in service in the bank a decade ago. All banks were vying with one another for selling gold coins then. There was a time (some four decades ago) when friends and relatives were running away at the sight of a relative who worked as LIC (insurance) agent. Similarly, my friends and relatives were also trying their best to avoid me when gold coins were being sold by banks.

At the request of this relative I tried to find a bank that sold gold coins. To my utter surprise, none of the banks were having any stock. Some of the contacts confessed that they have stopped selling gold coins long ago. Even the websites of private banks which showed gold coins as a product indicated that they are not available at present.

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Banking is known as a business of raising resources (deposits) and deploying them as loans and investment. Traditionally banks were concentrating on deposit mobilization. There was a time when a bank manager's most important work was procuring deposits. Lending was not a big task then as resources were scanty. Loan seekers were chasing bankers then. Credit squeeze and credit restrictions were in force. Banks had to obtain permission from RBI for disbursing their own funds sanctioned as loans to borrowers. This was called Credit Authorization. With the opening of the economy and globalization, movement of funds became easier and markets widened. Presently, deposits are pouring in and banks in India are finding it difficult to deploy their funds. Credit dispensation is not picking up. There is a mad race in retail lending now. Home loan takers never had this scenario before.

Banks made profit by charging more interest on loans than they paid on deposits. Central bank (RBI) prescribed and dictated interest rates for both deposits and advances. Interest rates in all banks was the same. Interest rates are deregulated now. Banks are free to fix their own interest rates for both deposits and advances subject some minimum restrictions. Banks make profits even now through the difference between lending and deposit rates. But there is pressure on margins. As spread (difference between interest rates on loans and deposits) became thinner, banks looked for earning from other services. There are concerted efforts to reduce burden (difference between non-interest expenditure and non-interest income) as the burden appears even more burdensome now. Traditional non-interest income sources like commission on fund transfers and agency functions like collection of bills have dried up like our water reservoirs. These conditions made banks jump into any business that gave additional non-interest income. While some business avenues like sale of gold coins have almost exited, selling third party products has taken center stage. Small Finance Banks, Payment Banks and non-banking players have further heightened the complexity of profit making by banks.

When one talks to young bankers today, there appears a confusion in their minds about real banking. Selling third party products has pushed traditional and core banking activities like deposit mobilization and lending to the background. Deceleration in economic activity and lack of demand for credit (loans) have made life difficult for bankers. 

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Rice with Dal (or Sambar or Rasam) is the main food habit in South india. Roti-Subzi is main item for people in North India. Some use a combination of both. Pickles and Pappad are additions to the main food items. One can have a meal with only rice and dal. Similarly, there can be a meal with roti and subzi (vegetables), or dal and roti. They are consumed even without pappad and pickles. Pappad and pickles alone never make a meal. They add variety and taste to the main course served in a meal. They are not a substitute for dal roti or rice-sambar.

Banking is essentially an activity of raising resources and lending the funds to those needing it for their ventures. Selling third party products alone never makes banking. Non-interest income cannot replace interest income. It should always be augmenting interest income. 

This is not to put down the importance of selling third party products. It is only to emphasize the importance of the basic and core banking activities of raising resources, and lending and investment. Sense of proportion should not be lost and the cart should not be put before the horse.