Sunday, 9 December 2012

The Swiss Bank Of Kerala.

Mommen the Banker decided to expand his money business all over the country .

Yes, money business. As advertisements inviting deposits are banned by the government along with that of liquor and cigarettes, the surrogate advertisements described his business as gold loans. That is lending on the security of gold ornaments, more than the value of the gold and that too at an interest lower than that paid on deposits. A bit confusing? Don't bother our regulatory authorities are also with you. (it is similar to selling a thing at a price lower than its cost, and give you more than what you pay for.)
A recent advertisement claimed his gold holdings exceeded that at Fort Knox in the US. The recent visit of high ranking officials to Switzerland to study the extend of unaccounted Indian money in swiss banks and to find ways to attract it to India, had convinced him that there is nothing much there. It is just stories by the economists in opposition. After all economics is a study of comics. He had realized it long back at the college when the Central Bank decided a 005% raise in interest to arrest inflation just like a squirrel on the elephant in a dirty story circulated among students.
It was simple. Retired, managers of large commercial banks and senior Government officers familiar with the sources of money were in plenty all over the country. Only the way to park the money was the problem. (In large commercial banks mostly owned by Government the scrutiny of ownership and source of income was a deterrent that prevented them from taking such business).

The simple formula Mommen had, solved it. The employees of his company were free to get the money from any one in any name and they were paid commission for it. The documents submitted by the gold loan borrowers were handy, so his business increased by leaps and bounds. Conglomerate Finance became the largest gold loan company In the world, with branches all over India. They accepted deposits within the limits prescribed by rules in the company's account and more in the accounts of firms of similar sounding names where interest was high and documents needed were few. Money was plenty to invest in high profit less legal businesses.
The depositors had no worry about the security of their money, After all, all the gold in the world is with the Mommens and its value was going up day by day. They considered it as safe as Swiss banks. Thus the Swiss bank of Kerala with count less deposits attracted money from all over the world.
The unprecedented success brought in more followers and still more competitors. They too opened thousands of branches all over the country.
The news papers were glad, they carried advertisements of many innovative loan schemes like instant loans, where you get the loan within seconds of your entering the premises of the company. The smart loan which shows you the ways you can invest the loan amount and make more money or the Gold gold loan where you can use the money you get as loan for purchasing more gold and avail more loans and repeat it and have a heap of gold in your name with the company.
There were short commercials in TV which showed our elderly cine artists jumping with joy along with their parents and grant parents on getting Gold loans.
Every body was happy. The depositors were happy their money is safe from the thieves and the law. The borrowers were happy they got loans at very low rates and much more than they expected. The authorities pleased at the safety of their jobs as all their bosses ( including political ) were in the game. So you could call it a happy happy situation.
But like all good things it did not last long. Some one who had availed a loan found out that there is a large deposit in his name with the company. He tried to claim the money but his claim was flatly refused. Undaunted he tried an alternate.
He leaked out that he got money, prompting many borrowers to claim that they too had deposits. Some approached the courts. The company's records were in shambles. The Conglomerate had no true record of the depositors. The addresses and photos of borrowers / past borrowers were the only records available. The depositors who could produce evidence soon withdrew their money. Others tried to get back their money by putting pressure on the managers, who ran for their lives. Nothing was heard about Mommen.
Authorities soon realized that the Swiss Bank of GOC was a bubble and searched for ways to save their rubber skins.

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