Indifference of banks, lure of high interest forcing many to approach fly-by-night companies
Raaga, Irawat, Magic, Patnala, SIMS… and the latest one to join the bandwagon, Akshaya Gold, have all left gullible depositors in the lurch after collecting crores of rupees from them.
In the last six months alone, about half-a-dozen ‘irawats’ (white elephants) have downed their shutters in Visakhapatnam, even as new ones continue to spring up. How do the new companies manage to wave their ‘magic’ wand over their prospective investors and make them dream ‘gold’?
The buzz word of the government is ‘financial inclusion’. But, how far are banks reaching out to the common man?
The poor depositor, who wants a small loan or wants to open an RD or Savings Bank account with little amounts is an ‘unwelcome’ guest at the banks. He is made to wait endlessly, made to fill all sorts of forms and the officials seek half-a-dozen proofs. “Thanks to competition from private banks, the nationalised banks are also going all out to woo high-value customers and rolling out the red carpet to corporate clients while shirking their social responsibility towards the common people,” says the Chairman of Visakhapatnam Cooperative Bank Maanam Anjaneyulu.
It comes as no surprise that many poor and lower middle class people continue to get carried away by promises of higher interest rate by the fraudsters. But, more importantly the convenient saving and borrowing options and agents collecting or delivering the money at their doorstep seems to be working in favour of the fly-by-night operators.
Hundreds of petty vendors and shopkeepers in the city are still dependent on ‘daily finance’ for their loan requirements despite the availability of banks in every nook and corner. “The business done by the ‘daily finance’ agents runs into hundreds of crores of rupees. This is also an indication that the common man is losing faith in the financial institutions. When that happens, it can turn out to be a disaster for the economy of the nation in the long run,” says Mr. Anjaneyulu.
“Declining moral values and excessive greed is resulting in small investors ignoring the risks involved, and falling prey to fraudsters. Unfortunately, the government seems to be content with ‘fire fighting’ after the damage is already done,” says Wealth Adviser Yellapragada Srinivas Kumar.
“Investor education and popularisation of alternative options like Systematic Investment Plans (SIP s), online investment in Post Office savings schemes and prompt action by the government would go a long way in checking fraudulent companies,” he adds.