indians do not qualify

picture this: a bank, in any indian town. outside the bank, a paanwallah, a sabziwallah and a small shopkeeper have been conducting business for over twenty years, ever since the bank was opened. it's a nice residential neighbourhood, and therefore neither the paanwallah nor the other two small businessmen live there. they live in a slum nearby.

will the bank ever lend any money to these three businessmen? so that they can move out of the slum? they've been working there, for the last twenty years, honestly and hard for more hours, every day, than any one in the bank itself. for twenty long years. does the bank trust them?

we can safely assume many of the employees in the bank know these three businessmen- some of them buy cigarettes, paan, others vegetables etc., some of them might even know that these three businessmen borrow money from moneylenders at very high interest, much higher than what borrowers from the bank pay. and also that they almost, always repay their loans on time. with interest. so, why doesn't the bank lend them money? they could definitely use it, reduce their costs, expand their profits and their businesses.

that's my question for all those sneering at american greed, gloating over the death of their banks, at their subprime crisis: why don't indian banks lend money to honest indians? the wikipedia says:
subprime lending is the practice of making loans to borrowers who do not qualify for market interest rates owing to various risk factors, such as income level, size of the down payment made, credit history, and employment status.
you see american capitalist greed, i see loans for people who do not qualify. in my view, the americans are human, you're definitely not. forget houses- 70% of indians do not have access to proper toilets. will indian banks ever lend money to those people? to groups who wish to build, say, community toilets?

no, you can't trust the indian poor. they will probably run away with the toilets.


Kishore Budha / किशोर बुधा said...

that is a misleading comparison kufr. even in the west, middle class, and lower middle class are asked for guarantees. try securing a loan to set up a business in the west.

you are right. the poor in india are institutionally discriminated as being unsafe investments. but the comparison with subprime lending is incorrect.

subprime lending IS an illustration of ontology of capital.

gaddeswarup said...

My impression from 'fracturedearth'blog is that some microfinance schemes were run in a similar fashion and thugs were employed to collect loans and there cases of suicides and prostitution resulting from this.

I also think that there is no point gloating about the American disaster. Firstly, even though Chidambaram thinks otherwise, it may still affect India (In australia my superannuation payments are affected). Secondly what applies in one country may not apply to another. Sweden had a similar crisis and they got over it. But Sweden is a social democracy and Americans may not go fully the Swedish way. Thirdly, dollar being a reserve currency, USA has special advantages which other countries do not have. My impressions is that Americans can survive this crisis if they change their attitudes a bit.

It is not very clear why others should care? In these days of globalization, I guess that everybody is affected to some extent or other. It seems that at the moment USA is managing on borrowed money from countries like China, Brazil, Russia and they may have some influence on what US does. I do not think that India is heavily involved but their service sector, getting capital for investments etc. may be affected. So, I do not think there is much to be cheerful about and there may be some lessons for all from this. India's problems may have more to do with over regulation and service delivery. But as you know, I am not an expert in these matters. Just trying to understand the trends.

gaddeswarup said...

Here is a humorous post in Telugu about the effects in India:

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