I was breaking my head, reading blogs to come up with one brilliant idea that i can use to set up my business (though I have no idea of what a brilliant idea is!), when this thought crossed my mind. How about helping the average American deal with the credit crunch in these tough times! As we all know - financial literacy across the world is a little uncommon, and riding this wave of bankruptcies, coming out unscathed is never going to be easy without some basic understanding of how credit works.
My idea is to start an online consultancy that helps people to restructure their portfolios. To make it clearer, I’d call it credit repair (as the problem is for those burdened with costly credit). It just sounded superb (at least to my earsJ) – a flawless business idea. What else can sell better?
Then I type in “creditrepair.com” into my browser and hit enter, to check the availability o the domain name. Believe me; I had no idea of this! There exists a web already – creditrepair.com, which offers the following services:
· How to manage you debt efficiently
· Buying a home with poor credit
· What you need to know about bankruptcy
· Getting rid of high interest credit cards
· How to recover from Identity theft, Innocent errors
· And many more....
I felt shocked and at the same time embarrassed about my ignorance of not expecting the world capital in finance not to come up with such idea for so long. But it was goo to know of such a service, though I don’t have the slightest idea of how successful this site has been in helping innocent borrowers come out of their financial problems.
Now I think again; what’s wrong in having a similar service for us – the Indians? Yes; there are big differences in the way credit is disbursed here and the non-existence of the concept of credit score. But so what? We can make an attempt at bringing an order to the whole credit system.
I envision a day when I walk into a bank and give my id (could be my PAN) and request a loan; and the teller can immediately tell me if I’m eligible for such an amount of loan for such a purpose, without asking for sureties, or asking me to make another round to the bank saying that the manager isn’t around and so on.
The point is that credit in India is available in pockets and accessible to people with contacts (it’s not necessary that these people have a great credit position). There is huge need to make credit superfluous, as long as the borrower has decent rating against his name. I believe that is the day business will happen at the speed of light.
About Me
- srinivas vedantam
- Few say I don't speak much... few say I speak well... I am my boss.. I like listening to people... I like watching people... I like to do my own math... Here I am... searching for myself...
Yeah but on such a day it wont take time before we go to the bankruptcy way. At least the americans would pay if they have money, we Indians have the mindset that take money and sit over it as if it belongs to us. To me banks are doing a fair job apart from one issue that yes you need a little jogad to get along with them. But then creditworthiness is a good thing to go alongside and just because we need business to run at lightening speed, that does not mean we make our banking system aa farce.....
ReplyDeleteThanks Rohit!
ReplyDeleteNot just for your views, but also for being the first one to read and comment.
Now, there is a small difference in the way we think compared to the Americans, especially when it comes to credit. But that doesn't make them saints, and us - defaulter nation. Most of us do pay our taxes - directly or indirectly. Similarly we do repay our loans. There a certain percentage ( I also don't know exactly how much) of us who don't repay the loans, in fact, they take loans without an intention to repay. Let me tell you the same psychology can be seen in equal percentage of American borrowers. The only difference is evasion of loan repayment is not as easy out there. You know why? Because it's not easy to repair your credit score once you evade a loan. We don't have such a system which makes it comparatively easier to do so here.
This adds up as one more reason for us to have such a system!
Your thoughts?
Seenu,
ReplyDeleteGood thoughts...
But the problem with the Indian system is that people prefer to do transactions in cash (unaccounted/black money) fully knowing the good and bad side of it. Things like these further complicate the system of credit score coming to existence and thrive.
But, remember back in nineties, similar things happened in the corporate sector when the idea of rating the performances of corporates came into existence, and we had seen CRISIL and some other rating agencies/companies emerged..
So individual credit score system definitely helps both the institutions and the consumers, but it might take few more years (may be another decade) to penetrate into the system, considering the large percentage of illiterate in our country.
Hey Seenu,
ReplyDeleteLet me be clearer before I make any comment as I have very little knowledge of the business and banking sector compared to you and anyone who have made their comments. So, I would like to request you to excuse me if I make any comment which is not apt.
I suppose it would be a great idea, however, it would take many many years to implement such a system in India. I think there are a few differences between America and India. In America, it is possible because every borrower can be uniquely identified due to a so called system called Social Security System. The biggest problem which I can see is that the population of India is much more compared to America and that makes it difficult to implement such a system which in turn makes the implementation of Credit Repair system very difficult.
What I believe is that an SSN system in India is the most crucial not only for such credit and banking related things but also for various other purposes like for example helping the officials in identifying voters, verifying employment history, credit history, driving history of an individual, and many more.
I would really like to see such a system being implemented in India efficiently and effectively before I die and I don't think it is impossible.
It much sounds like the jaagore campaign, the educated people get the facilities, where are you going to envisage 175000 Villages to use this facility in India, true lets hope in the case of microfinance, there has been ways of dealing, i spoke to the guys at SKS, a branch manager does look into surety for this purpose, say 5 people together get the loan, and out of that one is selected as a leader and he makes sure they'd pay... of course a few incidents of the case can be evident, for instance there is a campain launched by a bank called 'paisapandi', they actually give these aforementioned facilities to auto drivers, a very good cause, the point is credit does happen, but 'greed is good' syndrome gets into the way of multiple credit creation and this forces the other half into getting credit, we need to first try to get the customer into groove that credit is good, some states in India do not have the credit is good syndrome with albeit respect to people from my community, Jim Rogers commented "Capitalism without bankrupcy is like Chirstianity without hell", how many do take the slogan in India with the capitalist mentality, the plan is sure good, but needs operational execution, our credit system is very different, for instance X can take a credit card from company Z and Y with mimimum balance, and before the balance gets fully out, they take another card from company Q and repeat the process, their social security number tracks this and credit is created, in india we have KYC norms i.e. Know Our Customer, alright with that, but what is the real role of KYC...the americans are a million dollar mindsets, we are billion dollar one's.. we get into too many mindsets before concluding anything....anyway nice article... cheers pal ...:)
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