Does India Need Social Lending ? Essay

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Social Lending in India. - A Perspective In the Indian Social space the inequities surrounding the availability and cost of money have been documented repeatedly. You can negotiate a reasonable interest rate with your banker, only if you are a A + customer and as a MSEME or an Individual you are far from that, which automatically means that one pays a lot more than one can. This leads to its own set of problems both to individuals and MSEMEs. For the purpose of this blog, I shall stick to individuals with MSEMEs have an entirely different set of problems. All of the us know that this is because Banks raise money at a lower rate and part it with us at a higher rate. The rate depends on the risk profile as assigned by the bank with little or no transparency in their analysis of your situation and assign a risk profile to you. Most of these risk assessments are dependant on past data and in a country like India, where data integrity is very low, without laws to regulate the sharing of this information including recording and updating it, becomes a very subjective and arbitrary way of doing business. They get away since the sheer market volume is so high that it masks bad business practices by these lending institutions say banks or NBFCs or who ever. This lack of transparency coupled with low awareness and an overall apathy towards the situation, fosters it and to a large extent encourages it to thrive. Attempts at correcting them have been few and far between and even educated, well positioned people in society would much rather avoid the situation rather than attempting to rectify this. Enough on the pain point, there are so many, getting back to the need for money lent socially with a reasonable rate, clued in to the end use purpose, a soft but clear repayment program will help a long way in addressing this anti social situation that has been hoisted on to
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