Continued
from the previous post –
Farmers come under
this category and there problems are of similar nature as
manufacturers. Some may suggest that farmers have to encounter
nature's vagaries. Therefore, force major conditions apply to their
work. This sometimes makes their work more like gambling activity.
However, they are not gamblers in the sense "Gambler group"
is specified. Major difference in them is that Gambler group never
produces anything that is useful to the society whereas farmers
produce essential raw material for the development of the society.
Farmers are provided with special banking facility NABARD therefore,
depositors generally do not come in that business.
Builders – this
category comes under category of manufacturer and so similar argument
will work to justify high interest rates on loans to them. In this
type of business phenomenon of cycles, do not seem to be of much
importance however, it does exist. Profit margins are very huge in
most housing projects. This is proven by the fact that many builders
offer their own loan schemes to attract customers. This loan is
nothing but a way of giving the customers facility to pay the price
by installments. Any reduction in loan interest to this category is
like doing harm to the silent partner, depositors in banks, in this
business of money. Most failures in builder business are attributed
to mismanagements. Moreover, for their mismanagement, depositors need
not suffer.
Contractors –
this category comes as manufacturer. Their problems are similar and
their work style matches in several ways. They borrow to do work of
contract they have taken. Mostly their borrowing is for running the
contract until they get pay from the job giver. Their margins are
also similar as those of manufacturers and so looking to this rate of
interest at 15% on all loans they take cannot be taken as very high,
particularly when they charge margins of the order as 20 to 30% or
even more. In this business, cycles are experienced similar to
shoppers, particularly if it is a small contractor. Most contractors
work for government or other public services where they are paid
regularly. If we study balance sheets of efficiently operating big
contractors, we notice that out of total expenditure interest
component costs about 4 to 7%.
Continues
in next post –
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me on my Email ID given below,
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visit my other blogs
Ashok
Kothare,
http://ashokkotharesblog.blogspot.com/
for stories
I
reckon,
http://kotharesviews.blogspot.com/
for philosophy
You
may visit blog, Ideas
and tips on any subject,
http://kotharay.blogspot.in/
for intelligent discussions.
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