Muthoot finance company is going public to raise about Rs 950 crores from Public- News!
You switch on the TV and suddenly you find heaps of advertisements coming all over the channels certifying the accomplishments of this finance company by popular film stars and others who vouch for this finance company! You understand that all these advertisements are prelude to the oncoming public issue to raise funds from the market for which some kind of impression has to be painted. These advertisements vanish like a thin layer of smoke once the public issue is fully subscribed by the public and some over enthusiastic underwriters!!
These finance companies like Muthoot's and Manappuram gold were classified as Blade Companies meaning to suck blood out of the borrowers quite a few years back. The Reserve Bank of India had complete control over these non-banking finance companies and never allowed them to go beyond a limit. The public also understood the steep rate of interest that these companies charged and never patronised them unless there was an acute emergency! These companies were originally chit funds with clientele from the middle class who used to be content with the dividend that these chits used to give them every month on the draw.
Suddenly, I fail to understand how these companies have grown so much in size to warrant public issues. This could be because of slackness exhibited by the scheduled commercial banks who have allowed these companies to grow due change in priorities as a nationalised bank never wanted a middle class man to come to them with jewels for a loan!! The Reserve Bank of India being the central Bank of the Indian Finance system should certify these public issues so that innocent people are not taken for a ride seeing all those glitters about the company which will be short lived. There are hundreds of such public limited companies who have vanished overnight after appropriating and swindling public money for which recourse is unknown?
I appeal to all the investors to be alert in such investments and keep away from all those attractive advertisements as money once invested will be gone for ever unless you know the tricks of the trade and the right time to exit the holdings in such companies.
You switch on the TV and suddenly you find heaps of advertisements coming all over the channels certifying the accomplishments of this finance company by popular film stars and others who vouch for this finance company! You understand that all these advertisements are prelude to the oncoming public issue to raise funds from the market for which some kind of impression has to be painted. These advertisements vanish like a thin layer of smoke once the public issue is fully subscribed by the public and some over enthusiastic underwriters!!
These finance companies like Muthoot's and Manappuram gold were classified as Blade Companies meaning to suck blood out of the borrowers quite a few years back. The Reserve Bank of India had complete control over these non-banking finance companies and never allowed them to go beyond a limit. The public also understood the steep rate of interest that these companies charged and never patronised them unless there was an acute emergency! These companies were originally chit funds with clientele from the middle class who used to be content with the dividend that these chits used to give them every month on the draw.
Suddenly, I fail to understand how these companies have grown so much in size to warrant public issues. This could be because of slackness exhibited by the scheduled commercial banks who have allowed these companies to grow due change in priorities as a nationalised bank never wanted a middle class man to come to them with jewels for a loan!! The Reserve Bank of India being the central Bank of the Indian Finance system should certify these public issues so that innocent people are not taken for a ride seeing all those glitters about the company which will be short lived. There are hundreds of such public limited companies who have vanished overnight after appropriating and swindling public money for which recourse is unknown?
I appeal to all the investors to be alert in such investments and keep away from all those attractive advertisements as money once invested will be gone for ever unless you know the tricks of the trade and the right time to exit the holdings in such companies.
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