Blog@GraceJunction

Picture this: A young marketing manager in his early twenties living in a posh locality and earning a handsome Rs 60,000 per month (and thankfully a bachelor) is contemplating suicide.

And why not? The guy just finds out that he is supposed to pay equated monthly installments (EMIs) worth Rs 80,000. No wonder, the very thought of burly collection executives thumping at his door might be giving him sleepless nights.

But who is to be blamed? The one who takes such loans or the one who gives?

From the time when applying for a loan was an ordeal to a time when it has been made a child’s play, the sheer availability of money has led many to take the plunge. From the time when providing all the right documents to assure your credibility to the bank or a financial institution was like walking through fire, to a time when one can avail credit even through a phone call. While there was a time when getting your loan approved was a herculean task, there are now available what they call ‘pre-approved’ loans. What’s more, the creditor doesn’t carry a face anymore, unlike the typical munimji that our Indian film industry so portrays. Eventually, the consumer is left on his own to fend for himself; as if he belonged to the clan of Amartya Sen or P Chidambaram to carry the financial prudence with him.

I remember a few months ago how I was offered a “pre-approved” personal loan of around Rs 30,000 at a ‘flat rate’ of 2 per cent by a finance company. And why? Just because I was one of their “loyal” customers who had paid up all the EMIs without default for a mere sum of Rs 7,000 for a washing machine that they had financed. It took me another couple of months just to convince them that I didn’t need the money then.

And while these personal loans carry a ‘no questions asked’ tag to lure you, there are credit cards as well who, if nothing, will lead you to be an obsessive compulsive buyer. Though the cards may come with a tempting ‘minimum amount payable’ offer where you don’t have to necessarily pay what you have spent (not to mention the hefty discounts), not many realise that the even after paying the minimum amount the users are liable to pay up the whole amount that they have spent in form of an extended loan along with, this time, hefty interests!

Recently, I came across a few hoardings in the city which seemingly questioned the very matter and format of credit cards. The hoardings invited consumers to vent out their anger on credit cards by participating in a poll on www.ihatemycards.com. For once, I was relieved that somebody had taken up the task to question these credit cards and the superficial offers that they make. But to my dismay and disappointment, the hoardings belonged to a leading private sector bank offering a yet another credit cards which claims to carry no frills that the usual cards do. Try me!

With this kind of credit availability, you don’t need a kid John Connor from the movie ‘Terminator 2′ to use an ATM card hacking device to siphon cash and quip impishly, “Easy money!”

Thankfully, in an attempt of doing some soul searching, the Reserve Bank of India has ended up issuing guidelines to set up ‘financial counselling centres’ to educate the consumers in financial discipline. While this may lead to lesser suicide attempts, the easy availability of money will still act as a thorn in flesh. Not that a man doesn’t know his needs, but more the money at his disposal the more are his wants.

Again, with so much at our disposal to spend, it is becoming even harder to resist the lure of spending that ‘extra bit of money’, and no sooner do we do that than we end up in an unwanted debt trap.

What a peace the man must be at, who knows his needs as well as his wants.

This entry was posted on Tuesday, April 29th, 2008 at 11:01 am and is filed under Economy, Finance & Money, Society, Vinay, Youth Issues. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.