Ring-Fence Your Money
The Hindu|December 09, 2019
Investments in shares, corporate deposits, banks et al. can be risky in these times if caution is not exercised
Vidya Bala
Ring-Fence Your Money

If you thought debt funds were a bad idea earlier this year, then the DHFL saga in June 2019 would have given you a shock about corporate deposits. If you then consoled yourself saying there are still banks, the PMC Bank episode would have broken that thin confidence left.

After the PMC Bank episode, a friend of mine mocked that even equities look safer than banks as they can at least be liquidated any time. But he said it too soon as the plight of the risk-takers in the equity world just got worse. For no fault of theirs, equity investors who had a broking account with Karvy Broking are now left wondering if they indeed hold all the shares they actually own.

Did you know?

Who would have thought a marquee lender of home loans like DHFL, that too, several decades old (don’t tell me you don’t trust vintage), would have reached the endgame, going into bankruptcy? Did you know that NBFCs gave loans to you for a longer time frame (like home loans) but borrowed money for shorter time frames from large institutions? Did you know this can lead to what is called asset-liability mismatch and can spell doom when the money tap from such institutions suddenly run dry?

And the NBFC can become bankrupt when it is unable pay back its shorter-term borrowings because there is no fresh money (à la Ponzi)?

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM THE HINDUView all
‘Olympics Cancellation Likely If Vaccine Not Found In Time'
The Hindu

‘Olympics Cancellation Likely If Vaccine Not Found In Time'

Further delays impossible, says Tokyo Games organising panel chief Mori

time-read
1 min  |
April 29, 2020
It's Wholesale Only At Koyambedu Market
The Hindu

It's Wholesale Only At Koyambedu Market

Retail outlets to remain shut to bring down crowding.

time-read
2 mins  |
April 29, 2020
Ministry Does U-Turn On Plasma Therapy
The Hindu

Ministry Does U-Turn On Plasma Therapy

Treatment not proven: Health official

time-read
2 mins  |
April 29, 2020
Trump's Bleach Statements Echo Claims By Pseudo-Scientists
The Hindu

Trump's Bleach Statements Echo Claims By Pseudo-Scientists

‘Miracle cure’ quacks have long promoted industrial bleach to treat autism, malaria and many other medical conditions

time-read
3 mins  |
April 29, 2020
U.S. May Seek Damages From China
The Hindu

U.S. May Seek Damages From China

President says many options on the table to hold Beijing accountable, draws an angry response

time-read
2 mins  |
April 29, 2020
Koyambedu Market May Be Shifted Out
The Hindu

Koyambedu Market May Be Shifted Out

Decision likely at today's meeting of stakeholders; aim is to enforce physical distancing

time-read
2 mins  |
April 28, 2020
Massive Spike Of 522 Cases In Maharashtra
The Hindu

Massive Spike Of 522 Cases In Maharashtra

On Monday, cumulative tally surged to 8,590 positive cases with 27 more deaths

time-read
2 mins  |
April 28, 2020
The Script Of Disruption And A New Order
The Hindu

The Script Of Disruption And A New Order

Across the globe, the geopolitical and geo-economic fallout of the COVID-19 pandemic could be serious

time-read
6 mins  |
April 28, 2020
A Policy Road Map To Tackle Covid-19
The Hindu

A Policy Road Map To Tackle Covid-19

The interest of each and the interests of all now coincide, not only within nations but for all humanity

time-read
5 mins  |
April 28, 2020
ICMR Says No Payment Made For Chinese Test Kits Supplies
The Hindu

ICMR Says No Payment Made For Chinese Test Kits Supplies

Alleged profiteering by distributors supplying the kits

time-read
2 mins  |
April 28, 2020