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Monday, November 6

The culture shock I - Banking

One of the standard question popping up during conversation with friends these days is about the culture shock. When somebody first asked me the question, I found it a bit strange and my response to it a little stranger. Probably culture shock is a word too strong because I really can't find things which I could describe as "getting over the cultural shock". No doubt this place is very different from India but most of that was known and expected what with so much of US reaching our drawing rooms and bedrooms these days. Having a sister and numerous friends over years living in US also make a difference I guess.

But even in these days of global village, there are surprises. Some of them are presented here for your perusal. Interesting point to note is that some of them can in fact be described as "reverse cultural shock" in the sense that I expected them to be something based on the image of this place I had formed in my mind and they turned out to be the other way.

My very first encounter with any institution in US was with the banking services and after a really bad experience in Bangalore when trying to open a bank account, it was a pleasant surprise. It hardly took 15 min and a very short form to open the account for a foreign national who had stepped in the country 1 day ago. Perhaps all the immigration checks and strict visa processing makes the while-in-US processes easier. In Bangalore, it is virtually impossible to open a first bank account in private banks like ICICI and CitiBank unless it is a salary account. They even refused to take cash to open the account and told me on record that "I need to have a account in another bank in order to open one in ICICI". If you want the details I can tell you the branch where this happened.

On the other hand the internet banking facilities in India were much more comprehensive and better. Counter intuitive, isn't it? But with the account I have, I cannot electronically transfer fund which was the single most used facility in my accounts in India. Another thing that really took me by surprise is the ready acceptance of checks here. You write checks for everything and they are readily accepted. Back home, checks are most suspicious form of payment with DDs being the norm in most of the places. This might have something to do with the credit rating thing here.

So the deal is that every financial transaction you perform contribute towards your credit rating. Well not every transaction but those related to paying bills, writing checks, paying loans etc. You are located by your SSN and so that is a very important detail of your identity here. Now your access to many services depends hugely on your credit rating. So for taking a simple mobile connection, you need good credit rating. For getting a credit card again you need a good credit rating. For getting loans, of course you need a good credit rating and even for getting a electricity connection, you need a good credit rating ! While this makes perfect business sense and may be makes people more financially disciplined, I didn't particularly like it.

First reason is that I am a little uncomfortable with any kind of credit (with due apologies to gsharma and Chandel but really :-) ) and with this system, you are forced to use credit even if you have money to spend in cash just to build up the credit rating.

The other reason is that it is kind of circular, a closed loop system where being inside gives you everything while being outside leaves you completely stranded. At least that is my understanding till now. I am sure there will be avenues for those who cannot afford to have a "good credit rating" but they don't seem to be a part of main system which is not a very good thing according to me. Infact most of those seem to be involve higher upfront costs to safeguard business but that is rather ironical.

For sake of completion, let me mention that the concept of credit rating exists in a rather fragmented form in India also. So you have a credit limit based on usage in your mobile phone and on your credit cards but it is yet not centralized enough and it is not yet the single point criteria which it seems to be here.

Coming UP:
commuting
Security
Class rooms
food

in no particular order :-)

1 comment:

AC said...

Het I have written against the fradulent practices of ICICI in http://deal-fraud.blogspot.com