I started my business in 1996. And, from that day onwards, I have been grappling with a term called collateral security. I was shooed away from the first bank I had approached with a request for a loan as I did not have enough securities to offer them. Today, 20 years on, with an established business, a well known brand and a manufacturing facility in China where 500 people work, I am still not eligible for a bank loan for the same reason – the lack of collateral security.
The finance companies with which I do business ask for no such thing and make me pay interest at a higher rate to cover their risk. No sweat. But I have a few questions that I would like to raise on behalf of all small businessmen like me.
Let me begin by making two things clear. I appreciate the Bank’s concern to safeguard their depositor’s money by insisting on financial cover. I also appreciate the honest intention of all the bank officers who repeatedly insist on following the letter, if not the spirit of the written word.
But then, how is it that, despite all the rigmarole we small guys are forced into, that the Banks are saddled with the greatest chunk of Non-Performing Assets (NPA) in the history of Banking? Is it because the norms of lending are so fragile that they cannot perform the task for which they were put to use in the first place? Or is one to believe that such norms are only for small fries like us, to be relaxed for the crony-capitalist types who have taken helping banks get rid of their monies to the level of a fine art? Surely all the forms that we are expected to fill in while applying for a loan, all those undertakings and all those legal documents are also in place in case of these NPA’s? Surely the banks will initiate the legal proceedings with the same alacrity that they maintain for small traders on the verge of going belly-up, in case of these pillars of our industry? Not really a big deal, you know, if one were to consider the fact that as citizens, we are all governed by the same law of the land?
I have another issue that I want the industry pundits to contemplate on. With analytics and big data moving at the speed of thought, are we in a position to predict with a reasonable amount of certainty, about the intention of the borrower to refund the amount withdrawn? My private financers claim that with experience, they can identify the accounts that have the potential to go bad. They also claim that such systems are already in place, though to be cutting edge in effectiveness, the kind of data that they should have access to and the kind of algorithms that they should deploy will involve costs that are simply out of their range in the present. Why can’t the behemoths of our banking system adopt these systems? By taking the step, they would surely be doing more good to the start-ups and small businesses than mouthing the common platitudes that they are wont to mouthing to the media and at seminars?
It is more than two decades since I started my business. It is more than two decades without any help or assistance whatsoever from the Banking system so far as my funding requirements are concerned. Yes, I have run from pillar to post, from branches to twigs and everywhere in between, without success. And thus, when I read all the flashy bank advertisements professing their commitments to the customer – to the unknown small businessman on the street like me, I still wonder. Am I that ugly?
The piece was originally written for the Financial Express BFSI@Kolkata.
(Rais Qureshi, a first generation entrepreneur is the man behind the SKYled brand. He has manufacturing facilities in China from where he is rolling out a range of top-of-the-line products – television sets, computer monitors and the like which is fast curving out a niche for itself in the Indian market. On the anvil are newer products in the existing line as he stresses on the need to constantly innovate to stay ahead of the technology conundrum. SKYled also has some exciting plans about moving into related areas to reap the full benefits of having established a dealer’s network and the attendant synergies, which he feels, is a bit premature to disclose at this point in time.)