Monday, October 13, 2008

Investment Option

The names are meant to inspire trust. Surely, when you see names that have words like 'Benefit', 'Nidhi' (meaning treasure) or 'Permanent' in them, you feel a warmth, imagining these venerable organizations working hard to make sure your money grows. The premise behind all these organizations is simple enough; the trust that folks you see every day, who live in the same locality, will not indulge in trapeze acts with the money you've given them. You believe they will invest it prudently and will share their profits with you. Someone once said there were about 200 such organizations in Chennai; some of the more high profile among them, like the Royapettah Benefit Fund and the Alwarpet Benefit Fund strayed from the straight and narrow and went belly-up about 10 years ago.

Since then, the surviving Nidhis have been very low profile. It is partly due to some fairly severe restrictions imposed on them by the government, which hampered their ability to leverage funds and also forced them to provision for overdue loans much the same way that banks had to, while restricting their operations to only specific areas within the city. With such difficult conditions imposed on them, it is a wonder that the entire business model did not collapse.

The Mylapore Hindu Permanent Fund has been in the nidhi business for over 130 years now. With so much of chaos facing its larger cousins, these organizations must be feeling glad that they've been under so much of regulation for the last few years that there is almost no chance of them failing!


ARK said...

haha.. u forgot to mention EGMORE BENEFIT FUND among d high-profile ones... wat if devi valiamma happens to read dis blog..!! den ur doomed...!! lol... :D

Hilda said...

Very interesting post, as usual.

Your 'nidhi' sounds very much like our financial 'cooperatives' (we have different types of cooperatives, money being only one type). The amount of money you can invest — and borrow — is very limited, unlike in banks, but the ROI is much higher — and so is the interest. Definitely not the same, though, because none of our cooperatives have huge buildings like this.

LVISS said...

Benefit. For whose benefit needs explanation.

Shantaram said...

>> Arjun>> But the ones I mentioned crashed... don't tell her, anyway ;)

>> Hilda>> So many similarities! And the building looks huge only because of the way I took the photo.. it is just a 2 storey affair!

>> Ravindran>> Not mine, surely :(

ARK said...

now now... wat makes u think i'd do dat for free.... ahem...ahem... lol... :D :D :D