More than a decade back, Jewellers including Balu, Shanthi and a bunch of others were giving high interest rates of about 15 to 20% for deposits collected by them – one time FD with post-dated interest payment cheques. These are not jewellery plans that are run even today (Lalitha, NAC), where you deposit money on monthly basis like RD and after a period of time investors get 1 or 2 instalments of bonus plus discounts in making charges. The money was supposed to be used for the jewellers working capital and expansion plans. Retail investors, including a few close relatives of mine invested looking at the shop’s infrastructure and the amount of gold stock held by them only to be fooled by disappearing business owners.
Next came the game of Benefit Funds – Alwarpet benefit fund, Royapettah benefit fund and investors were conned by them – again by promise of high returns and they were lending to high risk businesses including movie finance. I have seen interest warrants being held by elderly people even after 5 years of shutting down of these benefit funds thinking they will be able to salvage some money.
This game continued (variants of similar promises) with growing Teak Farming (profits by growing sapling to fully grown trees that can be sold at high price commanded by Teak wood), Emu Farming (feeding the birds with food supplied and harvesting the meat of full grown birds, which was a few months of home keeping) only to see the rampage of birds not being fed properly, running on roads similar to the dinosaurs that we have seen in movies.
In none of the above scenarios, investors were promised of 100% returns but was well above market returns and for the incremental return, risk taken by gullible investors were high. In the latest story of Vellore based LNS International Financial Services (IFS) that seemed to have collected thousands of crores, returns of Rs. 8,000 per month or Rs.96,000 per annum, close to 100% per year has been promised. They have used 10,000 agents to mobilize money/deposits and one of the agents who mobilized deposits and also invested his money by selling lands, has committed suicide. I was told that the mastermind behind this initiative gets exclusive coverage in the first page of a popular Tamil magazine
It’s very unfortunate to hear the pitiable narration of investors in some news channels. Is it that the common man can never think rationally and can get conned easily as this is a different game and not like the earlier one or so called better articulated story.
As long as there are gullible investors, greed will prevail over common sense and it’s no different this time.
People come up with new attractive narratives and take common man for a ride, like promising a rocket ride directly to heaven!
<Blog # PenguWIN 1081 – Greed prevails over common sense>