Banks are not the place to save money for the purpose of growing it! That's the first knowledge one should hold. Banks are insurance companies with depositories (by law) to collect public funds and lend to credit worthy customers at a premium (interest) and charge small management fees to the depositors for keeping their money safe from theft, fire, burglary etc.
They can call that service fees or charges.
They are just like any other profit motivated organisation. They exist for profit. They are commercial organisations and the services they render aren't for free.
Who told you they should provide you free or discounted or grossly subsidized services? If you want to save money (to grow) go save in investment banks. But unfortunately, we don't have dedicated investment banks in PNG. What we have is traditional commercial enterprise banking systems design.
The Bank of PNG has regulatory powers to set in interest pricing mechanisms but that will only add to the detriment of the survival of these banks should the interest rates favour the depositors. Hence, there must be certain tolerance for these banks (insurance companies) to add a bit of margin to impact revenue and profitability.
Again, savers are the biggest losers - thanks to the design of our traditional banking systems. Personally, my answer to this is that citizens needed to be enabled to create wealth in terms of cash faster than the rate at which the banks are increasing the fees.
That is to appreciate a sense of increasing your financial wealth - cash.
This is because money saved over-time depreciates in value. K100 will be worth K30 to K10 in true value 5-10 years from here. This is called inflation. Our people now needed to be educated about the subject of money and wealth creation and not to work for money all their lives.
In my next article I will cover the benefits of a banking system domestically and how it affects trade.
Posts
