Where do Indians keep their money?

In banks.

What do banks do with the money?

they lend to builders (about Rs. 500,000 crores)

What do builders do with the money? do they use it for construction?

OMG no. They use it for buying more land. For construction Hdfc gives loans to the buyer who pays in instalments.

So this money goes towards speculation?

Hsssssssshhhhhhhh. Hdfc is a very profitable company.

So what should we do?

We should remove our money from the banks and put it into equities, debt funds, etc. and get BETTER returns.

Then what will happen?

Banks will not have money.

So what will the banks do?

They will push the builders to pay back their loans.

Will this happen immediately?

Hell no, but the pressure will tell…

So what more will the bankers do?

They will do what the Chinese bankers are doing now.

What are the Chinese bankers doing now?

Oh you did not know? They are wooing customers with phones, cars (Merc) , vegetables,….u name it…


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  1. In Japan, a customer needs to pay fee to keep money in bank. Also equity has given negative return in long term. Can you explain… why?

  2. Great article Subra!!! Now, we can understand why banks are pushing common man for the loans not to these builders…..

  3. Speculation would not stop as long as human being exists. Once everyone diverting to equity, stock prices reach abnormal levels no where near to their real valuation. Looks like people always find some thing or other to speculate like Commodities, Forex, Betting, Horse races and so on. Why to single out RE only.

  4. @Krish,

    There is no problem in speculation in RE. Let them speculate. But they are speculating with Money which WE keep with the banks. So they are using our money to speculate in RE. If they gain it is their profit. If they loose it is banks and thus our loss.
    So I sincerely hope this day comes very soon.

  5. further the RE involves half or so in cash and balance on account. with bank credit the power of holding by the builders increases and in fact the no of deals increase for them and so prices increase without corresponding increase of direct consumers.

  6. Maybe a RE regulator is needed to police the developer/builders. One critical regulation required is HOW long a developer is expected to take to complete & sell the property after it is given all requisite approvals.
    The land, amenity approvals, infrastructure etc., DO NOT belong to the developer to hold in his hands for as long as he sees fit!
    Otherwise, these developers will continue to hold everybody to ransom, and then just run away or declare bankruptcy, leaving everyone else holding the bag (abandoned half-constructed buildings in ghost cities!).

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