Here’s what happened today, and this was a typical day in India.
I stopped at my friend/my company’s director’s office today so that we could go to our bank together (I have my company’s bank account there); I had to do a couple of things. He couldn’t go with me today because he had other obligations; I didn’t have any problem with that because I knew that he actually had many things to take care of. So, I went to the bank alone.
I had to get a certain certificate from the bank, but because of a couple of administrative problems, I had to speak to the branch manager directly and ask him about it. I couldn’t find his at his desk, so I asked for him. After I spoke to three different people working there, I found out that he was in the meeting today and he would not be back in the bank until tomorrow. I also had to open a personal bank account, so I spoke to a lady who opened my company’s bank account. She told me that she would not open personal bank accounts (Why…???) and she asked me to speak to a different banker to open a personal bank account. I spoke to four different people up to this point.
I waited for about 10 minutes and then I finally spoke to a banker who opened personal bank accounts. He asked me what my purpose was, so I told him that I’d like to open a personal bank account. He asked me a couple of questions and he found out that I was not an Indian citizen, nor did I have any resident status; I was still in the process of taking care of all administrative tasks for my Indian company after all. I could only establish a legitimate resident status after that. He then told me that he could not open a personal bank account for me because I did not have any resident status in India. Then, I told him that I spoke to the branch manager a couple of weeks ago and the branch manager told me that I could open a personal bank account; I actually heard this directly from the mouth of the branch manager. The banker then tried to contact the branch manager, but he was unable to get to the branch manager because the branch manager was in the meeting (What a surprise …). He told me that the branch manager would contact me directly regarding this, so I just asked casually “So, you’re asking me to wait, right?”. He started talking about the branch manager’s being in the meeting, so I asked again, “So, I need to wait?” He, to my surprise, started explaining while he didn’t answer “Yes” or “No”. I asked once again, “I need to wait, right?” He finally said yes. I thanked him for his time and left. Oh, by the way, he didn’t apologize, say “sorry” or say anything else until I thanked him for his time.
I went to this bank quite a few times over the past couple of months, and I’d say that 4 out of 5 times, I accomplished absolutely nothing. Today happened to be one of those typical days that I accomplished nothing. *** sigh *** (I’m a bit tired this week …)
India, Business (India) | 9.03.2007 5:49 | No Comments
Someone made a comment about Indian people on my blog a couple of weeks ago:
Indian people are very arrogant and they show it when they talk. Again, this information is based on my interviewing several Indian people and is not based on prejudicial thinking.
Source
I don’t exactly agree with this comment, but I can kind of understand why he feels that way. This is one of problems of India; the vast majority of Indian people are probably good people, but some of those who provide services to foreigners (Americans, British and others) are behaving a bit arrogantly. They can charge high service fees in Indian standard, and given the demand for services provided by Indian working professionals is very high, they do not have to think long term; they can just provide short term services and they can just keep taking new customers. This is why they probably just don’t bother providing quality services.
My guess is that this applies to accounting services also. Many accounts in India provide services to foreigners, and my guess is that the demand for their services is rather high. Also they can easily charge high service fees in Indian standard; this is probably why some of them behave a bit arrogantly. I had a slightly uncomfortable communication with one accountant that I hired last year; I hired a new accountant recently for a couple of reasons, but I still need to communicate with this old accountant occasionally for a couple of reasons.
I received the following email yesterday:
Find herewith the bills as an attachment.
[His assistance name]
It included two invoices, one of which I had never seen:
January 3rd, 2007 Bill No. [Invoice No.]
To,
M/s [My company’s name]
Mumbai
Kind Attn: Mr. [My name]
Bill
Miscellaneous expenditure under Companies Act, 1956 Rs. 3,000=00
==========
Rs. 3,000 =00
==========
(Rupees Three Thousand Only)
Thanking you,
For [Accountant’s company’s name]
[His assistance name]
The invoice doesn’t say anything, so I sent the following email:
Hi [Accountant’s name],
I looked at the invoice No. [Invoice No.], which was originally issued on Jan 3rd, 2007; however, I had not looked at until today because I never received it until today. I have a couple of question.
I only see the description “Miscellaneous expenditure under Companies Act. 1956″ and the fee Rs. 3,000 for that. The description is too vague; frankly speaking, it’s a little unsound. I will make the payment for your professional services, but the payment ought to be made for specific services; there should be good explanations on how those services are provided and reasons why they are priced at whatever prices they have. After all, they are professional services.
Let me just step back and make a comment on the previous invoice No.152/06-07 also. Before I came to India, we exchanged a number of emails, and we agreed that the total fee for your professional services up to the incorporation was USD 1850 (1250 USD for the report + 200 USD for various government fees + 400 USD for the incorporation; this is according to the email that I received from you on May 22nd, 2006) and I already paid USD 1450 before I came to India, so I owned you USD 400. Now, No.152/06-07 charges Rs. 24.693, roughly USD 550, more than what we agreed initially and I was never informed of the reason why you decided to charge more until I received the invoice. However, I will not raise too many questions about this particular invoice at this point. I know that I am making the payment late, and I personally feel that it’s reasonable that I pay you a little more than what we initially agreed. But, even then, the fact of the matter is that I am willing to pay more than what we agreed.
Given the fact that I accept the fee Rs. 24.693, which is more than Rs. 6,700 than what we initially agreed, there has be a very good reason(s) why I am charged Rs. 3,000 on top of that. The short vague description “Miscellaneous expenditure under Companies Act. 1956″ doesn’t quite justify. I’d like to request you to give me more detailed information about the miscellaneous expenditure and a reason(s) why I should be charged Rs. 3,000. If the fee is perfectly justifiable, I will make the payment; otherwise, I would feel a little uncomfortable.
I will make the payment of Rs. 24.693 as soon as possible. I apologize for this once again. While I can only wait for my bank to give me FIRC, I feel very bad for making the payment so late.
Best regards,
[My name]
He replied back and wrote:
Hi [My name],
I appreciate your concern and also feel sorry that you have completely forgotten that we had agreed that certain fees shall be charged towards using my office address as registered office of your company and for lending my name as director of your company.
Since your company is now incorporated, you don’t want to recollect having discussed these matters.
I have categarised it as miscelleneous expenses in my bill because I can not officially charge this money from you for the services provided.
Thanks
[Accountant’s name]
I replied back to this and I wrote:
Hi [Accountant’s name],
> I appreciate your concern and also feel sorry that you have completely forgotten that we had agreed that certain fees shall be charged towards using my office address as registered office of your company and for lending my name as director of your company.
Yes, I do remember this. In fact, you said
> We will allow you to use our office as registered office for a period of two months from the date of incorporation.
on Nov. 17th, 2006. You also said
> [Accountant’s name] …That is not a big fees. It all depends on our relationship. I am a director in many
companies for no charge because they belong to my friends. Therefore we can discuss this later. Any way this will not be a big amount may be in the range of Rs 15,000 per annum.
> [Accountant’s name] … Please see answer to q 2. What we can do Director + Registered office, we will charge you…20,000 pa.
on Nov. 18th, 2006.
It’s been three months since the incorporation, so I do owe you Rs. 1,670 or so (Rs. 20,000 / 12), but the invoice itself was issued on Jan. 3rd, 2007 as if it assumed that I would need to lend your office address and your name for a month or two longer than two months; that seems a bit strange.
I am not saying that I will not make the payment of Rs. 3000 in addition to Rs. 24.693, but some things looked a bit ambiguous. Nothing more than that.
> I have categarised it as miscellaneous expenses in my bill because I can not officially charge this money from you for the services provided.
I don’t know … I think that you or your assistance could’ve dropped me an email and told me that what “Miscellaneous expenditure under Companies Act. 1956″ is really about if you could not put it in the invoice officially.
Anyway, I don’t want to dwell on it, nor do I want to spend any more time discussing about this. I will make both payments as soon as possible, hopefully in a day or two. I want to emphasize that I’ve never had any intension to delay payments; I just wanted to make sure that I completed all necessary paperwork.
Please bear with me just for a few more days (hopefully) …
Regards,
[My name]
Then he replied back:
Hi
I neither I intend to drag this issue any more nor I intedn to west time on writing mails to you on such issues but you must understand that every where in life you cant apply the formula of amount/12…if this arrangement was for 1 day… you will say 20000/365 X 1 which is Rs.54/- so you would have paid 54 rupees. Its strange to me that you calculate this way. First I never lend my name and give my office address to any stranger but I did in your case. On the top of it you write such mails. I am very upset and I got a lesson from this. Thanks for that.
You also speak to your consultant about giving name as a director is how dengerous in India.
I am surprised at your calculations [My name].
You can avoide paying the whole amount to me….
Please have long term view from relationship point of view….
[Accountant’s name]
The total service fee charged is over USD 2000, and this is very good money in India; I already paid USD 1450. Given that, I expect the top quality service from this accountant; it is a fair expectation; however, he lacks basic skills. For example, misspellings and grammatical mistakes are all over his emails. We all misspell words and make grammatical mistakes, but he makes too many mistakes, while he ought to provide the top quality service. Also he can’t just charge a fee saying that it’s for “miscellaneous expenditure.” Besides, he’s an accountant after all; he ought to do better than that; he cannot be so ambitious. He is apparently not happy, but his performance hasn’t impressed me.
This is just my side of the story, but I can’t help thinking that the customer service (or the client service) that this accountant provides is not of high quality. Ironic statement is this, “Please have long term view from relationship point of view….”; if he actually believes in creating long term relationships, then he does his best to provide the top quality service. This, I think, is one of bad examples of India and one of examples of “arrogant Indian people.”
India, Business (India) | 7.03.2007 1:42 | No Comments
Ok, so it’s official; it costs more money to form a company in India. I’d get into more details later, but, to make a long story short, there is too much paperwork to be done to form a company in India and get various required approvals, permits and identification numbers. In principle, each of these doesn’t cost much. Especially to those who are from developed countries like US(?), UK, Germany, Japan, etc., the cost is small. However, …
1) You need to bribe a public official every time you file a paper.
2) You cannot do this on your own if you are not from India because you don’t really know how to bribe; you probably have to hire a consultant to assist you and that costs money.
2.1) The consultant does not charge $100.00 an hour, but even if he/she only asks one tenth of it, you need to ask him to spend many hours; this adds up over time.
2.2) To make a long story short, the whole process takes a long time, and thus, your consultant needs to spend many hours for you. The Indian consultant may charge only one tenth of what a typical commercial lawyer in US charges if you just look at two hourly rates; however, if the Indian consultant ends up spending twenty times as much time as the lawyer in US spends to get all paperwork done to form a company in US, then there is no difference between two total costs.
It literally takes 10 minuses to incorporate a C-Corporation in US. You should really take time to create various documents and you should ideally hire a commercial lawyer to create those documents for you, but you can really do this on your own; this is no rocket science. Forming a Private Limited Company (or Public Limited Company), which is the equivalent of C-Corporation in US, in India, is a different matter. While I understand that those who operate in India need to make adjustments, this is a very simple fact; it takes a much longer time to form a company in India than in US, and thus, it costs more money.
India, Business (India), Business (US and International) | 1.03.2007 23:36 | No Comments
I’ve been writing that ICICI has quite a few problems while it is India’s biggest private bank. My friend, who is an Indian person, keeps telling me that ICICI provides good services and we should really be happy; I didn’t exactly agree until just a couple of days ago, but I agree with him now.
I happened to stop at one of government bank offices a couple of days ago; the office itself was located in a fine location, and it had a very pretty view. I don’t get into details for variety of reasons, but the location itself was nice. However, I just thanked god that I did not open a bank account with a government bank (By the way, most of major banks in India are government banks. SBI, State Bank of India is one of examples; it is the biggest bank in India). I found that people were nice; I don’t get into details, but I was actually sitting inside the office where employees worked. Who knows? Maybe, they were quite capable. Maybe, they were very intelligent. However, I found lack of order in the office; I also did not find that bankers were responding to customers’ request swiftly. I found built-in inefficiency. I want to emphasize that bankers were not necessarily unproductive; it’s just that the system was not designed to make them work productively.
I don’t have any bank accounts with any government banks, so I don’t have any first-hand experience, but I personally prefer not to have any first-hand experience. Imagining what I would be experiencing if I opened my Indian company’s bank account at a government bank is rather frightening. Friends, open a bank account with a private bank if you plan to run a business in India.
India, Business (India) | 1.03.2007 23:24 | No Comments