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.
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