Many people think they (and the industry tells them) that they are eligible for a “home loan”, car loan, personal loan, credit card loan etc.

Actually this is not true. You only get a loan against your Form 16, which means this is a loan against your future earning capacity. Imagine telling a lender that you want only Rs. 25 Lakhs for a house costing Rs. 200 lakhs

ALSO TELL HIM/HER that you will not have any income in the future and you will sell some shares to repay the loan. The lender will baulk.

The loans that you are getting is strictly against your future earning capacity, NOT ON YOUR NETWORTH, not on the cost of the asset that you are buying, not on the reputation of the builder, not on the reputation of the car manufacturer, …just on your future earning capacity!!

So let us call it a Form 16 Loan. And if inflation is likely to be at 13% for the next week, you can rest assured the lending rates now would be in the region of 15% per annum.

And why are you given this loan? So that you know what to do with your time without worrying whether it is Narendra Modi ruling us or Congress continuing its misrule. What is called the ‘Conspiracy of the Rich’….

So first they tell you ‘look you may be brilliant but you need our dumb managers to manage your money’ , then they tell you ‘you need a bigger car, house, job, …..’ then they tell you ‘do you not need money to – a) educate your kids b) meet your parents needs c) etc. etc…….

And how can they make you save or invest? simply by making the inflation look monstrous. That we all do impressively….

So what is the bottom line?

So let us welcome inflation! ┬álol……………..

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  1. But Subraji, don’t you think this is the way an economy grows. Banks loan individuals/corporates, this money is used by them in buying/producing more stuff, thus increasing the demand/supply in the market. This starts a cycle and keeps the economy running. In the countries where there are no banks, or are no loans being given by the banks, the economy is stagnant. In our country we can see this in Bihar. Just compare the economic growth of Bihar with that of Karnataka/Maharastra where banks are lending and people are borrowing.

    Where am I missing the point ?

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