Chandrakant More, a bus conductor in Mumbai, takes home a monthly salary of about Rs12,000 ($296) and is short on cash to pay for his daughter’s admission to a good school. He has a savings account but his bank has refused a loan because he lives in an illegal slum and does not own any assets. Until recently, Mr More was the perfect customer for the local moneylender but in September last year he got a much cheaper loan of about Rs25,000 from a new lender in his neighbourhood, Fullerton Credit, the Indian consumer finance arm of Singapore-based Temasek.
India’s growing economy is producing hordes of loan-hungry consumers with no access to bank loans. This underserved market, which some estimates put at 50 million households, represents a vast, untapped opportunity for lenders. In recent years, foreign lenders such as Citigroup, General Electric, Standard Chartered, HSBC, Temasek, Development Bank of Singapore (DBS), and Indian lenders such as ICICI and Kotak have begun making inroads, selling unsecured loans, some as small as $500, to workers with growing incomes but almost no credit history or legal documents.
