Who me, Poor?: How India's youth are living in urban poverty to make it big by Gayatri Jayaraman

Author:Gayatri Jayaraman [Jayaraman, Gayatri]
Language: eng
Format: azw3, epub
Publisher: Bloomsbury Publishing
Published: 2017-07-18T04:00:00+00:00

The blame is not entirely that of the young to shoulder alone. If banks have such high Non-Performing Assets (NPA), where is their 14-15 per cent profit coming from? It comes from the retail business. “Because there is demand, there is supply. With new technology making it easier, peer to peer lending is a click away”, Halan says.

India’s recent sharp rise in lending to consumers can, in some part, be blamed on the relaxing of stringent norms that govern who may or may not be given a line of credit. This comes at a time when there is no off-take on corporate lending. In simple language, banks can’t make profits off institutions at this point in time, so your income is the scapegoat. You are what they rely on to provide them interest when their other sources are low. So when a telemarketer sells you a loan, a credit card, a great interest rate, he’s typically going out of his way to ensure you get what you want, even if he has to overlook a salary-to-loan ratio here and there.

Your spending benefits a whole lot of people. It bankrolls the banks and it boosts the economy. The stock markets go up when consumers spend. That’s why a lot of non-banking companies get into the loan business. If the bank which hosts your savings account won’t give you a loan, someone will offer you a credit card with a year’s fee waived, and if that won’t work, some smaller financial institution will oblige, and if they won’t, a financial technology company—the fin techs as they are called—are here to issue almost instant online approvals and loans; verification, documentation etc. come later. No, they were not merely being nice to a fresher new to the city. They spot an opportunity.

Swanand Kelkar of Morgan Stanley pointed out in early 2016 that the consumer lending portfolio of the top Non-Banking Financial Companies (NBFCs) is equal to ($92 billion) the retail portfolio of the top private sector banks. NBFCs have a 44 per cent share in automobile loans and a 52 per cent share in loans against property. The strong revival in micro finance shows that small lenders are also on the rise. Micro finance has been slammed in the past for pushing borrowers into debt traps. Default rates for finance are generally low in consumer segments to draw consumers, and in India, it is still low compared to international standards. Personal loans are most sensitive to default. This leads to rise in household debt in specific categories rather than across the economy, as in 2008, just prior to the recession. SBI economist Soumya Kanti Ghosh has shown that the share of personal loans in total loans has been rising over the past two years, though it is still below the 2006 peak.

He commented in a research report published in April 2016: “Personal loans share is currently rising in the total loan portfolio which leads one to wonder if this increase suggests a movement towards

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.