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Sunday, April 21, 2013

Chit funds, cheat funds

Once more a ‘chit fund’ scam has exploded over West Bengal, large sections of the public are furious, and a few heads are beginning to roll, while many others are praying that they are too high and mighty to be singed.

I have been following the pattern since I first started reading newspapers – aeons ago – and some things never change. Let me put them down categorically.

Everywhere in the world (remember Ponzi schemes and Bernie Madoff?), some people want to get seriously rich quick.

A fool and his money are soon parted, so the less foolish among these wannabes make money by exploiting the greed of the more foolish: typically by telling a lot of people they will get back far higher returns than banks and other legitimate/mainstream financial institutions offer if they ‘invest’ in the various ‘business projects’ that these companies claim to have floated. Typically also they are engaged in areas like real estate, movies, sports, the stockmarket, the tourism/entertainment industry, TV/newspapers and so on, if not also in gambling, drugs and the flesh trade.

These scamsters bet on the long established truism about human nature that there’s a sucker born every minute, and mankind in the large never learns from history, so they will never run short of prey. The majority of their victims are poor and lower middle class people – your typical small farmer, rickshaw puller, petty shopkeeper, construction worker, door to door salesman and the like, who could be pitied for lacking the kind of education that would make them cautious about the Big Bad World (and who therefore deserve, and get too little of, protection by the government), but, tragically, there are also a lot of people who claim to be ‘educated’ and ‘experienced’ (at least before their children) and yet are led by their greed and gullibility into burning their fingers badly. Thousands of them in my own town!

As I wrote in a blogpost in connection with Lalit Modi two years ago, you need only four things to get rich quick – arrogance, shamelessness, violence and greed. Well, maybe I’ll add one more: connections in high places.  Absolutely no other qualifications required, and all you need to keep praying for is that luck might not suddenly desert you until you become too big to fail, like the directors of Citibank (or Sahara India?). Within a few years or at most a decade, you will move from slum to five star environs, from your dad’s rickety cycle van to a spanking new Audi or BMW, you will have legions of minions, from armed thugs to trained lawyers and CAs and MBAs to protect your back and do all the legwork and dirty work for you (people who have been to IIT and consider themselves ‘successful’ because you pay them at most a measly couple of lakhs a month: think of those who work for Vijay Mallya or Anil Agarwal of Vedanta fame), you will have sexy bimbos swooning on your arms, you will throw parties where the champagne flows like water even though you might never have passed class eight and you owe billions to millions which you have no intention of ever paying back – and much of society (read the mass media, including and especially the parts of them you personally own) will be going gaga over you as a great success, even a great man. And that success will keep begetting success, because nothing attracts prey to you as the smell of big money being squandered on a lavish scale, no matter how it has been made.

It is not good or wise to blame it all on the politicians, for a number of reasons: a) politicians do not tell people to be both stupid and greedy, b) some politicians actually try to fight the ever-present menace of sharks devouring minnows, and get little thanks for it, c) a lot of people feel politicians have no business trying to teach them to restrain their greed and tell them to be less foolish, d) in a society where almost everybody is trying to get rich quick (so why not the politicians too?) – and given the fact that it has always been very hard to make big money quickly by honest means – a lot of such ‘human interest’ stories will keep happening, because most ‘successful’ people do get rich only by duping the foolish and the greedy, e) politicians, alas, can thrive and even get some good work done only by winking at, if not actually being hand in glove with, the sharks whose sole aim in life is to make money no matter how, that’s the way the world is, f) too few people notice that many of the money bags become politicians themselves, and play a not insignificant role in breaking, bending or changing laws so that they can keep playing their dirty games with less and less to worry about. And to those who say – at age 20 or 80 – that ‘come socialism, and the world will become paradise’, this incorrigible sceptic will retort ‘Ho hum. Read history, or keep dreaming.’

Meanwhile, I started earning my living early, and am nearly high and dry, having followed my own three maxims resolutely: a) make just enough for your needs, keeping an eye on the far future, b) don’t envy and slaver after big money, c) don’t listen to anybody, however fancy his car, his office or his calling card, who offers to make you rich in a year or two. When I have needed worldly advice, I have taken it from the likes of Shakespeare and Ben Franklin and Tagore, not your hot-shot twenty something MBA in finance, be he from Harvard or IIM…and I cannot pass on better advice to those who are coming after me.


Subhadip Dutta said...

There is nothing you can say much to these people, Sir. If people cannot learn from history, then there is nothing one can do about it. Everybody thinks, 'it is not going to happen with me...'. Just like people who do not wear helmets while driving motorcycles think 'the accident will not happen with me', these people are also the same. The less said to them and about them, the better it is.

Let us instead silently watch the show, and tell these people nothing until they are put to suffering just because they are unwilling to see the obvious.


Sayan Datta said...

Dear Sir,

The short story 'How much land does a man need' acquires huge significance in the context of this blog post. It is frightening really to see what greed can do...almost reads like a horror story that one. The three maxims you have talked about carry a big lesson in them. The first of them reminds me that you had said some other time that after a certain point in time a man must know where to stop as far as earning money is concerned. He mustn't cross a certain line because even though he could then be much more comfortably off by earning more, the price that would be exacted from him would be huge. Excess of money corrupts like nothing else - how true that adage! About the second maxim, I wonder how or why even old people, at the fag end of their lives still cannot think beyond how much money they have earned, or lost, or their sons and daughters are earning, when all that should concern them is earning a little more of some good karma before saying the final goodbye to the world. And these people don't have a clue where all the emptiness within them is coming from! For the third maxim, I wonder whether talking of the 20 something hot-shot MBA and Tagore in the same breath, as people seem to have no trouble doing nowadays, isn't the highest form of corruption there is? If being merely rich and being great mean the same thing...I now understand why you say that 'all corruption begins and ends with language'.

Sunup said...

With rampant consumerism and uneven growth in lifestyle, I guess the wish to become rich in a short span on time is on the rise. Everyone wants to own what the other guy owns. And to take advantage of this mentality such chit funds and other means of thievery are thriving. Unfortunately a vast majority gets easily duped too, because the greed to become rich suppresses all other rational thoughts. Recently saw a news story, where a local cab driver here in Bangalore got duped off nearly 20 lakhs. He had apparently fallen to the now frequent SMS scams run mostly by Nigerian thugs, wherein you are congratulated on winning millions of dollars/pounds sponsored by some well known company and where you are asked to contact some number or mail id for further instructions. This fellow had apparently 'won' around 80 crores (!!!!) and was asked to transfer nearly 20 lakhs to a certain account as part of processing fees and tax. He borrowed from multiple sources (private financiers) and thus lost it all. I feel even the present day banks are partly responsible for all these, by blindly opening accounts and aiding in money laundering. The age old system of 'introduction' to open an account was much safer and transparent.

Subhadip Dutta said...

Though not directly related with this post, I think this link will be somewhat relevant:



Rashmi Datta said...

Dear Sir,

Thank you very much for such an insightful, informative and thought-provoking post. I am reminded of Amartya Sen’s words ‘The moral obligation of being informed’ and understand their meaning better as the days pass.

There is a lot of ‘Samalochana’ going day and night on the various news channels but very few seem to have the courage to state that it is greed, gullibility and stupidity that has led to the sad loss of the money of so many ‘educated’ people.

Your post has forced me to ponder once again on the kind of education that is required in our country – the kind which empowers a person with a fine sense of discrimination through thorough grounding in Literature, History and Science - and the present day ‘mug-up-the-textbook’ kind of schooling our young students are getting. With the present educational scenario, we will only produce more and more ‘educated’ suckers. It is the first kind of education that needs to be provided to the masses if we wish to protect them from the kind of frauds like Sarada and Sanchayita permanently.

Added to the lack of education is the present zeitgeist ‘Making money is the only worthy ambition in life’ that is drilled into the minds of the children that makes matters worse. Now that I am able to observe the people around me better, I see so many ‘educated people with good backgrounds’ swooning over big money , inwardly envying and admiring crooks and thieves who have the opportunity (if only temporarily) to enjoy the high life. These are the very same people who expect unalloyed honesty from all the politicians. I wonder why we have such prejudices against politicians.

Greed is powerfully alluring and I think so is laziness, avarice, arrogance and fear. I am beginning to realise that it is through knowledge and wisdom that these can be fought. As you wrote to me on my blog, ‘Satsang’ is also very important. I am grateful to God that I have the opportunity of interacting with you through your blogs and otherwise.

Please keep writing and enlightening us, Sir.

Warm regards

Suvro Chatterjee said...

This news link


clearly illustrates my contention that most suddenly rich people are crooks at best and idiots at worst, often by their own admission. And this rascal was driving about in BMWs, throwing parties at fine hotels, and fooling around with thousands of crores (that's several hundred million dollars) worth of other people's money. See why I cannot admire the merely rich, why I wrinkle my nose at them?

Sayan Datta said...

Found this quote by one John Charles Salak on the cover of a notebook -

"Failures are divided into two classes — those who thought and never did, and those who did but never thought."

Considering Sudipta Sen as a hopeless failure, I thought this quote goes pretty nicely with your post, Sir. Please correct me if I am wrong.

Ranajoy said...


Well summed. I agree with you too. The only other angle that I wanted to share is that ,not all villagers or the menial labourers have an access to Banks and other big fat Investment firms. These institutions literally rebuke the poor people and intimidate/insult them for their not having proper PAN card, Voter ID cards, Pay slips,address proofs, Utility bills and what have you. Chit fund agents on the other hand come on a bicycle on the door steps of the poor people and sweet talk them to get the job done.

Suvro Chatterjee said...

Ranajoy, if you had read the post a little more closely you'd have noticed that this is not 'another angle' at all: I have mentioned it already! But yes, I agree entirely with you - the dice, even after centuries of reforms, is still heavily loaded against the weakest, both in terms of money and intelligence...