I was reading somewhere (sadly do not remember where) that saving money is very difficult in primitive economies. In one such economy in Africa, the banker CHARGES (yes you read right) charges interest for taking money from you and keeping it safe. And people are used to PAYING interest to have their money safeguarded. There is enough research to show that when people do not understand the complex charges of a scheme they are willing to pay the charges. Not sure if people kow but LIC Mutual fund (asset management company) has an index fund with about 2.5% charges. Oh la la la…I would love to OWN (be the amc) of an INDEX fund with 2.5% a m c charges have about 100,000 Rs. crores, life would be fun!!

Now fairly obviously if a McKinsey consultant enters the ‘business of microfinance’ it need not (saying cannot is wrong) and the funders include Citibank – well they are not here to do charity, correct?

So SKS lends money @ 31% per annum to the ‘weaker segments’ gets money at about 7%  – and 24% is legitimate business income! Not bad…remember the risks that Somali pirates have to take to get this %age of margin. Stop cribbing, now you can participate in the party, there is an IPO coming. Is it not better to be invested in the MARKET LEADER who is here to create wealth for the shareholder, is it not?

So what if the bill is being paid by your maid servant, driver’s servant, servant’ s servant,…of course we will bring rules agains usurios lending, and all such things after Citibank has earned enough money from India – enough to bail itself out after the 2019 multi deposit fraud by a big conglomerate in infrastructure, …etc.

wanna read on?


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  1. no offence intended but i have noticed in your recent writings that your blogs start with lucid easy to understand content. Some where in the middle everything gets so complex and uninteresting I could hardly keep reading. Not at all sure what i was supposed to get out of this aticle.

  2. LICMF “had” (not “has”) 2.5% charges on Index fund. After SEBI rule, they promptly brought it down to 1.5%. Let see if SEBI can bring it down to 0.5% gradually…

  3. first of there is nothing called usurious lending.if two parties agree to a rate,then it is a freely determined rate. if one of the parties was coerced into it -even if it is a low 2% interest(or say tax payers getting gypped by politicians),it is not acceptable.
    it is a shame that the brits who started the moneylender bashing have just left that legacy to the brown sahibs educated in oxford and JNU today. the moneylenders,were not the typically cruel merchants of doom that phillummakers with no idea of rural life portray.

  4. Dr Mohammed Ali Khan

    I agree with pravin..
    If I’m an auto driver with no collateral and need to borrow to buy an auto and if the Pawn broker on my galli is the ONLY one who is willing to lend me money, and he charges 25 % or 50% , how does it matter to a third person who is watching the transaction.. And if the third person who is watching this transaction feels it is usurious.. then HE should risk his own capital and lend to me, instead of standing on the sidelines and commenting about Usury..

  5. The financial services industry – like the medical industry – has come a long way from servicing the customer to fleecing the customer. Today when a doc recommends anything people look at it with ‘what is in it for him’ kind of a look. Respect has been traded for fleecing. Bank charges look good only because of the ‘not understanding of charges’ by the customer. Look at credit cards – it is like an addiction. First students are given cards free….that is the whole process. Similarly a money lender does CHARGE usurious rates. We need education AND SHOULD FORCE ALL FINANCIAL INSTITUTIONS to sell one range of simple, easy to understand products. Looting a customer because he does not understand is bad – and then you blame him for not getting educated. This is sick.

  6. what you are saying is that financial transactions involve information assymettry.there is nothing unusual about it.thats why we have middlemen in almost every service-because people cant spend time on specializing in everything.thats why we have blogs like yours and people like dhirendra kumar of valueresearch who educate investors.those who buy only because the ‘market is going to go up.my agent gave me a tip’ deserve to lose their money. fleecing cannot be removed by ‘forcing’something top down.only the mode of fleecing will change in that case.
    if people dont understand X product,why do they want to buy it?.dont they have a reasonable understanding that wading into unknown waters in dangerous?. if not,a fool and his money deserve to be parted.
    adults dont need govt babus to tell them what is good for them or not.people should educate themselves by reading blogs or magazines before entering into financial products they have no clue of.
    we are not infants to fall for advertisment pitches on TV!
    we are adults,pleaselet the govt treat us as one

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