Sunday, December 12, 2010

The unmaking of India

This post played on the mind for long. I just didn’t have the courage to spell my fears. For some time now we are hearing and seeing a bit too much that makes us lose the famous Indian complacency. I had been one of the ardent believers of the shining India story. But now I feel the façade is giving away at a mind boggling pace to show the hollow innards of the system. But Iam not trying to bring attention to the majot topics of the day like the telecom scam or Radia tapes, but bring to light a fast spreading phenomenon that can leave the people in the shackles of penury.

GOLD LOAN – a new nomenclature for the old pawn broking business. Many years ago the leaders of newly independent India had taken efforts to push these to mere existence and showed people that banking was a safer and saner solution to financial needs. The habit of saving was inculcated in us and the gold was safest investment and saved to deal with the needs of future.

With increased consumerism, the needs have escalated but the incomes of all haven’t. Senseless borrowing seems to be order of the day. The condition is much like the Hindi sayng”Aamdaani athanni aur karcha rapaiya’ ( income 50 paise and expenditure a rupee). You get loans of all kinds – education, car, vehicle, house, personal needs, business etc. Earlier you went to the bank of financial institution for a loan, now they are after you asking you take a loan. But even with this kind of banking approach, people just want more money faster. Result, they opt for GOLD LOAN. They pawn the ornaments with some new age sahukars and get the money and if the business idea fails end up paying exorbitant interest that squeeze the life out of families.

The GOLD COIN investments are yet another nice way to trap the naïve. A closer inspection to the terms of these brings forth the fact that there is no sale involved. You believe that you invested in gold but have actually pawned the gold. I hope some journalist publishes details of these and people can be saved.

A look at the statistics shows that hundreds of new offices of these not so holy NBFCs have opened. They have made inroads to hitherto unchartered territory snuffing the future out for many. The loans have helped some but harmed many.


  1. Daylight robbery! These "NBFCs" fleece gullible customers who walk into their trap wide-eyed but literally blind!! The RBI should perhaps intervene and save them.

  2. I am always against any kind of loan.. Once shud spend money that is in hand..

    Why spend what is not there ... or SAVE it , I got in one of the credit card traps the once which say 0%apr, you spend the amound and then forget it and when it comes back in 6 months time its too late and u end up paying much more

    so now i have got rid of all my credit cards everything ... And I dont take loans.. got enough big mortgage to last me a long timee

    these malpractises shud be brought forward plus people need to be educated not to go for something that one cant affrod .. its this i want that cause they have it ...

    But you are right something shud be done so people dont fall prey...


  3. The pledging of the gold is done mostly by very poor poeple who cannot get loan anywhere to meet an emergency like sickness.The rates of interest of private lenders are often usurious.The loan advanced against gold is a fraction of its value.Most of the borrowers who are unable to pay even the interest lose the jewel.It may be wiser sometimes to sell the gold outright than pledge.The lot of poor is still miserable and the growth has not touched them.

  4. They package it so well that you think they are there to help us. But its not.

  5. India shinning!!!!
    All that glitters is not gold.
    And if one cannot understand ones financial capacity and borrow or throw more than what rationally come in well let be at ones peril.

  6. Be prudent while taking loans and don't get mislead by glitzy advertising. Be sure to read all the fineprint and understand the interest structure well.

  7. Here in the States, for quite a few years now it has not been possible to conduct business or even get a job without a shining credit rating. Yes, that's right. The whole economy has depended on rampant borrowing. Saving is penalized with low interest rates and taxes on what little you do earn. There's even a death tax so your heirs cannot expect to keep all that you leave for them, even though what you have earned has already been taxed. I guess the message is: spend, spend, spend while you still have breath in your body! Revive the economy and leave nothing for your children.

  8. frankly, I don't have a clue abt Gold Loan... :P

  9. RGB
    Daylight robbery right under the govt's nose!

    You seem to be safe from this problem:)

    K Parthasarathi
    Gone are the days when only the poor took gold loan. Nowadays, people who live in big houses and own luxury cars too do it.

    Few are sensible like you.

    Anil Kurup
    The glib sales talk make one overstep the limits.

    But many fall into this gold loan trap especially those who do small business

    US has a different kind of problem. you guys haves taxes that a bit too taxing. but here, this new age gold loans are making people take unrealistic risks which in the long run make them heavy debtors. It is too scheming.

    You will soon. The menace is spreading fast. One firm just got so rich with its scheming ways that though of humble origins, it even sponsors an IPL team

  10. I am against this practice. But,when every one in politics is on loot, why not a few who are left out?

  11. Bk Chowlaji
    Mil banth ke looto can hardly be a stand to be taken.

  12. Got to know about it for the first time!

  13. First they should ban that 'veetil swarnam vechittenthin' ad! So unnerving! And desperate people fall for all this stuff!

  14. Neena Sharma
    Sad to be the first to let you know.

    Destiny's child
    The problem the attractive packaging of the Loan and investment changes the definition of 'desperate'

  15. Its a modern day debt-trap. Rising consumerism is the reason for it.

  16. Gold and land are the two best investment options..putting down what I learned from others..he he..I am not the one with at least a satisfactory economic sense..

  17. sulphurdreamz
    welcome here. we sound the same:)

    Investment whisked away is the matter of concern

    Scarlet pimpernel
    Athu njangal idatholam( shudder)