Operation Khedda

I had heard of elephants which get lured into eating sugar cane in deep forests where a deep pit is covered with bamboo shoots and sugar cane’s so that elephants come to eat it and fall into the pit. Once the elephant is caught like this, it lands up doing hard labour in the jungle, lifting wood,rocks or move over to temples, zoo’s….

This operation is called Khedda operation where elephant falls into the pit. The reason am remembering this is for the offer given by a private bank for its customer.

Upfront it looks quite nice and simple – you get 2 Lakhs INR without questions and you repay in small EMI…

Loan (In Rs) : 200000

Tenure(months):48

EMI(In Rs): 6520
Some back of hand calculations..

What you get as loan : 2 Lakhs
Amt paid by you at end of 4 years : 312960 [ 6520 x 48]

The excess money paid as interest to bank : 112960 INR

Thats a whooping 56.48%!!!

So before you fall for this khedda operation, think – infact you can deposit this amount like a EMI for that period and enjoy your own money but the young ones fad theme is ‘we live now’, in that case welcome to the operation!

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16 Responses to Operation Khedda

  1. Ankur says:

    dude…. your calculations are all wrong… this loan is calculated on a interest rate of 24% p.a. compounded yearly…. you are mixing things up

  2. Srik says:

    Right thing to do is, dont deposit, but use ‘ur’ money, not the bank loan..

    Loan gets on to be a Load after some time!!

  3. Dear Ankur,
    Thanks – you are right straight away in the sense its only 24% pa compunded BUT the fact is you have landed up paying 50 odd % more than the original loan. The reason why its being called a khedda operation is because,

    You buy a mobile phone (FMCG) for example for a loan of 25K and repay in EMI for 2 or 4 years like the above example ( a personal loan ), at the end of tenure, you would have landed up paying 50% more than the original cost AND

    The actual cost of the FMCG goods like mobile would have dropped to scrap value like 10%. So this is a double whammy due to which you have landed up with a outdated scrapped FMCG goods having paid 1.5 times more than others.

    Srik,
    So true… since most youngsters dont have ‘ur’ money, they fall for this trap. Idealy they should be able to generate (save) that and buy the asset at end of tenure.

  4. Ankur says:

    there are 2 reasons why you would go for a loan.
    1) investments.. like buying land property or stocks where you hope you can beat the interest rates. and leveraging gives u a unique benefit of being able to increase your return many folds.
    here its a sensible thing to do.

    1) you will like to spend and enjoy when the time is right….
    i can take that trip to Hawaii after 10 years.. but will I have the same fun then?

    so spend when the time is right and pay when you are comfortable.

  5. Ankur,
    Buying land – housing loans at lower rates of 12% are better than 24% personal loans without collateral. Its a extremly risky preposition to buy equity on loans – 8 out of 10 loose the game – not advisable for loans – a grave mistake.

    Agree that time and tide wait for none and some couples are doing what you have suggested too – but thats miscule population compared to others. Majority of loans are used for aquiring FMCG goods, services which are the bane points.

    Your comments are part of the last lines in the original post! 🙂 Thats the yuppy generation.

  6. Veena says:

    Mohan.

    This has to be cross posted on financial funda section of MB blog…

    and thanks for the warning.. well I am away from personal loan anyway.. due to their hefty EMI’s… 🙂

  7. Veena,
    Done!! I know you plan things out neat and clean!

  8. Veena says:

    Maohan, thanks .. despite of all these sometimes so hardly run out of liquid cash!…
    most of the times it will be few days before 1st, so I am saved;-)

  9. bachodi says:

    Gosh.. thanks for warning. Which bank is it anyway ?

  10. Veena,
    I worked for a company who solved this problem way back in mid 90’s, we got salary 2 times – first 60% on 12thn and the next 40% on 26th!!! This wont work in modern EMI days i suppose 😉

    Bachodi,
    You name any bank except nationalised ones – the name fits. This offer is from the bank which never sleeps and lets its customer loose the sleep too 😉

  11. Prasanna Sastry says:

    Mohanavare, if you offer me loan at what u r mentioning I can take loan from you. i dont mind paying 56% extra for my friend. 😀

    As per the present interest per month is 1.5% and for 48 months the total amount comes to 387000 .

    Pls correct me if i’m wrong all the learnt people

  12. Sastry sir,
    Some thing wrong 🙂 Me giving loans!!!!!! No, I dont want to be called ‘baddi maga’ as RK put it in earlier comment sir.

  13. Vani says:

    Mohan,

    Which was that company you worked for? Let me know if they have openings….nammalli sarkaari kelsa dalli first salary came after 45 days

  14. Vani,
    Little confused…this comment is for which post pls?

  15. Veena says:

    Mohan, read the comment you wrote addressing me on July 16th 4:01am where you spoke about 2 salary days per month…

    bega ondu post bariri, blogging and commenting marthogtha ideera hege ?

  16. Veena and vani,
    🙂 Unforunately that company folded up operations in the late 1990’s….

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