The Anubhav Plantations Scam

With the stock markets performing badly and banks cutting back on interest on deposits, plantation schemes appeared very attractive for investors impatient for returns and willing to take risks. An investor commented, "Why do people invest in these kinds of firms? Because people want to make more money, fast. What do we get from the nationalized banks as interest? A mere 5-7%! Whereas Anubhav was paying 21-24% interest. Why can't the government pay better interest?"

Explaining why these schemes were so attractive to the public as well as the finance companies, Natesan commented, "We offer 24% for all deposits of three years and above. This is not high when compared to the interest charged on loans by banks. I borrow from banks at 18%. When I do that, I have to offer security for a similar amount. That pushes up my effective cost to 36%. Therefore it still works out cheaper when I offer high interest to my depositors." Following the failure of major players such as Anubhav, a majority of the plantation companies vanished overnight.