Meltdown trickles down to bottom of the pyramid | business | Hindustan Times
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Meltdown trickles down to bottom of the pyramid

business Updated: Oct 12, 2008 20:45 IST
Gaurav Choudhury

“My business in the insurance sector and mutual funds is down by around 60 per cent impacting directly on the revenue and forcing me to downsize.” That’s Sandeep Bhambri who works as a distributor for insurance and mutual fund products.

The impact of the global turmoil on the Indian equity market has started to show in the businesses and jobs at the bottom of the pyramid, where small businesses and their smaller staff are facing it directly.

Because of the downturn in the economy and the crash in the stock market, investors are shying away from making new investments into unit linked insurance products and the mutual funds.

As a result, businesses working as distribution agents, like Bhambri’s, of these products are seeing a sizeable drop in their revenue collections.

Predictably, Bhambri’s revenues have fallen over the past few months. And to keep his business at par he had to do away with the four telecallers he had employed and has also terminated three of the five executives he had working for him.

“I am left with no option and many of my friends in the financial services business are quitting this line of business,” he said. “I never expected such a sharp turn in the business environment and slump in my revenue flow.”

People are investing more into bank deposits and other debt instruments.

Bhambri also specialises in personal loans but that line of business is already under pressure with interest rates touching new highs. “The personal loan interest rates are hovering around 23 per cent and this has pulled the business down,” said Bhambri.

The financial services industry is the first to be impacted as a result of the weakening sentiment in the equity market but there are many other who might come under fire if the financial system does not see a revival soon.

Bhambri is one of several lakhs who is taking this meltdown bullet between his eyes. Altogether, there are 25 lakh insurance distributors and 72,000 mutual fund distributors. And until the cycle turns again, the pressures on Bhambri will continue to take their toll.