Share shops - that's exactly how they are described locally - are mushrooming in rural Bengal. Their uniqueness lies in the fact that they operate off TV channels and not on any exchange terminals. So while terminals of the National Stock Exchange (NSE) are languishing in villages, the shops are doing fine.
Market sources described the shops as rural versions of share casinos existent in Kolkata. They have spread all over the state, each doing brisk business. Experts say the business of several hundred share shops collectively amount to crores.
The top name in the list is Nath Share Investments (popularly known as 'Nathbabu's share shop') at Shyampur, 70-odd km from Kolkata. Nathbabu admits that the shop's business in last month was around Rs 6 lakh, up 10-fold over the volume it recorded three months ago.
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The share shops do not charge any entry fee, as Business Standard reporters on a visit discovered. Nath's shop, located in a semi-finished brick hall above a sweet shop on the main road, is low-key and carries no visible nameplate.
Any investor is questioned closely, with personal phones being noted, before Nath opens up. Once satisfied, he says his success is on account of extraordinary skill in identifying the right scrip at right price. He sits surrounded by 30 local youths who claim that they have "benefited from his advice."
Investors can purchase any quantity of some selected scrips at the price appearing on the Jain TV or Aaj Tak channel displayed on a small portable B&W set in the shop. The investor is given a slip registering his purchase quantity and price, and he has to pay up his money at once. But there is no delivery, for Nath did not have any visible sharemarket link and refused to name the broker he deals with, if any. The investors, however, are charged a brokerage fee.
In the meanwhile, the investor is urged to liquidate his holding, again on the basis of price on the TV. If he sells at a loss, he pays the brokerage and Nath gobbles up his loss on 'undelivered shares'. If he makes a profit, the investor is told he will get his money in 28 days. Thus Nath executes 'Buy' orders against cash and 'Sell' orders on credit, charging fees both times.
As trading is focused on a few low-liquidity scrips such as Shree Securities, Continental Securities, Motorol and Prudential Pharma, rigging market prices are no problem at the particular counter to post a loss.
The second ploy is more subtle. Nath assures his investors they will earn lakhs, for while they wait for payment, he identifies fresh winners for them free of charge.
The investor is thus persuaded to buy again, reinvesting the entire base capital and profit of the previous trade. All those present in Nath's shop admitted they have made notional profit and continued their investment, but were yet to get a payment.
Time and again, Nath refused to name the sharebroker involved or why the investors are not offered delivery or why he did not have a trading terminal.
But the faith of the local investors in him was unshakeable and they trust him to hold large sums in profit on their behalf against scrips. "After all, he is so generous that he picks the winning scrips for us," they gushed.
The local police gave a typical answer: no one has so far complained against the share shop and therefore they cannot act. So while the state government boasts that the income of the rural population has multiplied under the Left Front, and the high small savings collection in the state, the lure of quick returns continues to attract the gullible to share shops.