Cab guys’ tales

I travel to and from work in the company-provided cab. It’s a fairly convenient system, offering you flexible timings, and routings that aren’t too bad. The overhead in terms of time of traveling by cab is about 15-20 minutes for a 40-minute journey, so I take it on most days.

Given a choice, I try to sit next to the driver – maybe that’s the most comfortable seat in an Indica, and it definitely is the best seat in a Sumo. On most occasions, I chat with the driver as he drives me, but sometimes I don’t have the opportunity – since the driver is too busy chatting on his mobile phone. Yeah, company rules forbid that, but I guess no one really complains, so these guys get away with being on the phone a lot of the time.

Most of the time, the conversation is about loans, and repayment. Most of it is about informal loans that people have lent each other. The amounts these guys lend each other – seen as a percentage of their income (which I’m guessing based on what one cab guy told me last year) is humongous! They make loans to each other of the order of a few months’ salaries, and it seems like these loans are in perpetual transition – between the cabbies and their friends.

I hear them shout, strategise, pacify, ideate, about these issues. And sometimes after they’ve hung up I talk to them about this. One conversation comes to mind. So there was this cabbie whose family had lost a lot of money by “investing” it in a chit fund. It was an “informal” (i.e. unregistered fund), and in the previous “round”, his family had invested and made a good return. So in this “round”, more members of the family invested in the fund. And the fund manager decamped with the money!

I remember telling him that it was a bad strategy putting all their investments with the same guy, and tried to explain to him the benefits of diversification. He replied saying that he didn’t want to invest in the chit fund (the one he lost money in) but family members forced him to invest along with them, calling him a “traitor” when he tried to diversify!! Strange.

Back then, I didn’t know how exactly chit funds work else I would’ve also told him that it was an especially bad idea for people from the same family to invest in the same chit fund. If you think about how a chit fund works, you are basically betting on the desperation for money among the other “members” of the fund. You are betting that someone else in the pool needs money so badly that they’re willing to forego a higher “discount” which will then come into your kitty. So with members of the family all putting money in the same fund, they were just betting against each other! So even if the fund “manager” hadn’t decamped, it’s unlikely they would’ve got a particularly significant return on their investment.