Fastest loan first

It was a hot summer afternoon in May, and we were walking the streets of Rangwasa, Rau—a small feeder town in rural Madhya Pradesh, just a couple of hours away from Indore by car. We were there to assess and learn more about the health of the rural economy. As part of this, our consultant had arranged four to five meetings with various microfinance and small finance banks, as well as visits to the branches of a few non-banking financial companies (NBFCs).

I wondered how we would manage to cover three to five meetings in the two hours that we had. I was even more surprised when he said, “We can leave our car here and just walk to the next few meetings.”

It was then that I realised that not only were they all close by, but all the companies were also located on the same street! We literally went door to door, one ‘shop’ after the other. On either side of the road, there were financiers from across the spectrum, from extremely local microfinance companies and regional small finance banks, to well-established NBFCs and top-tier, private sector banks.

Armed with their tablets and access to the credit bureau’s database—which aggregates all individual borrowers’ financial profiles and repayment behaviour—they were all there on that one street, hawking their loans. No longer were they competing on the basis of who could give the largest loan or the lowest interest rate, but instead on who could approve the farmer’s loan the fastest.

Sujit Sahgal is a financial markets professional with more than 27 years of experience. This story is an edited excerpt from his book ‘A Wall Street View of Rural India’.

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