India’s Lending Boom Can Be Safer, If Not Slower
Instead of chasing a narrow group of more affluent borrowers, banks must use the nation's innovative payment system to broaden access.
Broadening access to credit.
Photographer: Dhiraj Singh/BloombergDepending on whom you ask, consumer credit in India is either growing too rapidly or not trickling down fast enough. Bankers speak with awe of the industry’s phenomenal expansion, which is so fast-paced that the regulator is starting to get concerned. Fintech players like to draw attention to its lopsided distribution. The industry keeps chasing a fraction of affluent urban professionals to the exclusion of everyone else. Broaden access, they say, and the scorching growth may become more sustainable.
For lenders, however, the problem with adding new borrowers is the incremental cost. The economics of even modest democratization — to a wider section of regular wage earners, for instance in factory townships — makes the concept a nonstarter.