A Little About Lending

India is the place to be. Growing economy, developing businesses and booming employment. Survey said Indian youth seems the happiest in the World and enthusiastic as well, and obviously the reasons are mentioned. They are more financially adventurous than before. India is experiencing lending boom which is a well-known characteristic of an economically growing institution. Banking sector has gone beyond the horizons and we are having a huge number of Business entities providing loans, mortgages and credit services. It has became more easier for a common man to reach his pictured dreams of having a beautiful house in a suburb, having an A-class car in the front patio and having all technological joy-toys.

Where do all these things lead to? Recently, Britain’s Northern Rock has faced a tremendous crisis. They asked the Bank of England to cover the crisis and that means heavy money. Due to the democratic policies it is all transparent to the general public. Hundreds of people queued up to withdraw their life savings and they could not convince themselves even though the British Government assured that their money is safe. People withdrew nearly 3 to 4 billion pounds in 3 days and more are awaited. Result, it gets worse. Northern Rocks shares are broken by 58%. The government is calling it an international crisis but it is solely a British constitution and it has nothing do with any of the international economic event. The complete blame goes to the Northern Rock management and they did not control the way it went to that stage. And in fact, over 500,000 owe more than 20,000 pounds in one or the other way. (Source: BBC News UK website)

In India, it may be just the beginning. It has happened before as well and we have seen the crowds not the queues in front of broken banks. The scene was significantly smaller. As recently read in a local newspaper, borrowing money from the banking societies and other financial bodies has been easier nowadays. You just have to providing proof of address, proof of identity and salary slips and you will get the loan by end of the day if it is not a huge amount. Financial companies are not the less to do anything to get the customers who invest the money as well. Home loans, business loans, personal loans and car loans, we know them all. But let’s hear some more, loans for home appliances, electronics, furniture and many more. More amazingly, people are buying cooking oil and grains with the installments like ten rupees a month. People are not hesitated to borrow money for anything. It sounds a positive change if we take the availability of the resources in account, to everyone and it also leads to a standard living style for a common man, but just the external. Consequences are not foreseen yet. We are not unaware about the outrageous national debt. It is true that we are an upcoming economy but still we don’t have enough resources to cover any huge crisis as such. Financial Companies are making most it, and there is nothing wrong but they must be sure to whom they are lending and how much they should!? Government also must have the control over financial activities around the country. We will not be able to appreciate any crisis as such but till then enjoy the credits; I call it plastic money…

Sneh Bhavsar

London, 21 September 2007