This post was originally published on The Economic Times
Rural India, which is home to 64% of our country’s population, remains an undeniable factor in India’s aspirations of a $35-trillion economy by 2047. Of the myriad ways to spin the wheel of economy, nothing has been as efficient as providing credit to the rural hinterland. A credit card to an urban customer is likely to encourage some spending, but in an idyllic, picturesque rural setting, it transforms into business, the addition of jobs, and further value to the economy.
Of course, a naïve mind may wonder, why go through all the razzmatazz of lending? Why not directly credit the accounts and spin the wheel? Much like why go to work? Just tap the debit card and live off the ATM! Providing credit is as much an art as growing a business is—credit to the right business makes nations, but to the wrong one? Well, it’s an NPA (non-performing asset).
Credit: The achilles heel
Banking credit is a numbers game. For banks and non-banking financial corporations or institutions, providing a credit statement is akin to the coin toss of a cricket match—it may be important but not as important as the game in itself. The institution needs to verify that the borrower is
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