Wednesday, January 28, 2009

Muddling through chaos

For the past few weeks, I've been getting used to the chaos that is India. Our return to the US has been temporarily delayed, but we hope that issue is taken care of soon enough. Till then though, I'm having as much fun here as possible, while shuttling between Bangalore and Chennai. It has been a few years since I last visited India, and all I can say is that years of pathetic administration continue to run down Bangalore. Chennai, while also bursting in its seams, seems to have better order within the madness. Exchange the bus drivers and climate of Bangalore with Chennai, and you end up with a city that wins hands down over Bangalore. It is amazing how quickly weak administrations can ruin something that is good.

******

While I try to get back to regular blogging (with perhaps some observations from India) here's a story I'll leave you with.

I happened to sit in an autorickshaw in Chennai that was being driven by an extremely chatty driver. Never someone to resist conversation, I probed him on with questions, which he was only too happy to answer. Now, there are thousands of autorickshaws in Chennai ferrying passengers across town, and fleecing them without ever bothering to turn on that meter. I usually consider them to be rogues and thieves. But there are stories behind their lives as well. Only some of the autodrivers actually own the auto that they drive, with most of them renting the auto from auto owners for a large sum. The ones that do own their own autos though don't have it easy. This driver was particularly happy that day because he had just finished paying the entire cost for the auto, and was now an independent auto owner. To prove it, he showed me his freshly minted receipt of payment.

So I asked him how he could afford to buy me an auto, and he told me his tale. He used to be a vegetable seller (as proof we whizzed past some vegetable vendors, he yahooed them, and then told me that was his brother-in-law and family, who still continued the family trade), and then decided to buy an auto. He first wanted a bank loan, so opened a savings account in the bank. He had some 5000 rupees in it, and thought that was good enough to get a loan. But the bank wanted collateral (or at least a minimum savings balance of rupees 60000). So he said goodbye to the bank, and found a money lender, who willingly gave him the money (with the auto itself taken as collateral). Now this poor guy has to pay some ridiculous amount as interest. He didn't know the exact percentage, but said that his total loan was about rupees 120000, and he would have to pay around rupees 175000 back to the money lender, over a period of some 5 years. That was his scratchpad calculation, though if he didn't pay that up in 5 years, even that sum would skyrocket.

No wonder, he said with a smile, that he would never ever put that meter, but charge me whatever he thought I could pay (which, apparently, was quite a bit). I wonder though, can't there be any better way for someone like him to raise capital to buy an auto? I understand the banks have a need for collateral, but if money lenders can lend the money (and I'm sure they are more careful with their money than banks are), can't banks do it? Economic gurus, what ideas do you have?

That said, auto drivers in Chennai remain thieves, and I curse them all with a lifetime of indigestion for their dishonesty.

9 comments:

Destination Infinity said...

Does that mean auto wallas in bangalore are not able to buy their auto's at all? The problem with auto's in Chennai is, they are used only as a last resort that too if no other option is available incl the city busses by passengers like me. But in Bangalore, I take auto's, even though I have a bike! Naturally there must be more money flowing to autovwallas in Bangalore. His logic of making more money per trip is more than compensated by the lesser frequency of trips, is what I think.

Destination Infinity

Rohit said...

Are you sure that is not a typo?

120000 loan and return 175,000 in five years? That sounds pretty reasonable to me.

(Unless 175 k is the interest--not very clear from your post.

Ashish Gupta said...

Bank don't have as many avenues compared to money lender to collect defaulted loans so they are more cautious.

Sunil said...

DI......quite right about autos in bangalore, though some of them seem to be learning from their chennai counterparts and are trying to charge more than what the meter says. Too bad.

Rohit....i think the interest is pretty steep, but the bigger point is that there should be better avenues for credit than the local money lender. There is a deeper issue here isn't there?

Ashish...sure banks are cautious, but if they can verify enough details about the borrower, and if they can get some security and if the sums are relatively small, i'm sure they can come up with creative ways of lending.

Sunil said...

DI......quite right about autos in bangalore, though some of them seem to be learning from their chennai counterparts and are trying to charge more than what the meter says. Too bad.

Rohit....i think the interest is pretty steep, but the bigger point is that there should be better avenues for credit than the local money lender. There is a deeper issue here isn't there?

Ashish...sure banks are cautious, but if they can verify enough details about the borrower, and if they can get some security and if the sums are relatively small, i'm sure they can come up with creative ways of lending.

111 said...
This comment has been removed by a blog administrator.
Dwiti said...

to think that an auto driver has fallen prey to a local moneylender is a dangerous thought..
i think microfinance still has a long way to go in India..

Sujatha said...

V has a Chennai auto story too. He was negotiating the price before he got into the auto. They were about to settle on a price but the auto driver said he could take a short cut. V said Ok and asked what the price was. He got a new, higher price. 'Why' was the obvious question. The reply was, "Because I'm taking you on the short cut!" Go figure!

Waiting to read your thoughts on Bangalore.

Anonymous said...

看房子,買房子,建商自售,自售,台北新成屋,台北豪宅,新成屋,豪宅,美髮儀器,美髮,儀器,髮型,EMBA,MBA,學位,EMBA,專業認證,認證課程,博士學位,DBA,PHD,在職進修,碩士學位,推廣教育,DBA,進修課程,碩士學位,網路廣告,關鍵字廣告,關鍵字,廣告,課程介紹,學分班,文憑,牛樟芝,段木,牛樟菇,日式料理, 台北居酒屋,燒肉,結婚,婚宴場地,推車飲茶,港式點心,尾牙春酒,台北住宿,國內訂房,台北HOTEL,台北婚宴,飯店優惠,台北結婚,婚宴場地,推車飲茶,港式點心,尾牙春酒,住宿,訂房,HOTEL,飯店,造型系列,學位,牛樟芝,腦磷脂,磷脂絲胺酸,SEO,婚宴,捷運,學區,美髮,儀器,髮型,牛樟芝,腦磷脂,磷脂絲胺酸,看房子,買房子,建商自售,自售,房子,捷運,學區,台北新成屋,台北豪宅,新成屋,豪宅,學位,碩士學位,進修,在職進修, 課程,教育,學位,證照,mba,文憑,學分班,網路廣告,關鍵字廣告,關鍵字,SEO,关键词,网络广告,关键词广告,SEO,关键词,网络广告,关键词广告,SEO,台北住宿,國內訂房,台北HOTEL,台北婚宴,飯店優惠,住宿,訂房,HOTEL,飯店,婚宴,台北住宿,國內訂房,台北HOTEL,台北婚宴,飯店優惠,住宿,訂房,HOTEL,飯店,婚宴,台北住宿,國內訂房,台北HOTEL,台北婚宴,飯店優惠,住宿,訂房,HOTEL,飯店,婚宴,結婚,婚宴場地,推車飲茶,港式點心,尾牙春酒,台北結婚,婚宴場地,推車飲茶,港式點心,尾牙春酒,結婚,婚宴場地,推車飲茶,港式點心,尾牙春酒,台北結婚,婚宴場地,推車飲茶,港式點心,尾牙春酒,結婚,婚宴場地,推車飲茶,港式點心,尾牙春酒,台北結婚,婚宴場地,推車飲茶,港式點心,尾牙春酒,居酒屋,燒烤,美髮,儀器,髮型,美髮,儀器,髮型,美髮,儀器,髮型,美髮,儀器,髮型,小套房,小套房,進修,在職進修,留學,證照,MBA,EMBA,留學,MBA,EMBA,留學,進修,在職進修,牛樟芝,段木,牛樟菇,住宿,民宿,飯宿,旅遊,住宿,民宿,飯宿,旅遊,住宿,民宿,飯宿,旅遊,住宿,民宿,飯宿,旅遊,住宿,民宿,飯宿,旅遊,住宿,民宿,飯宿,旅遊,住宿,民宿,飯宿,旅遊,美容,美髮,整形,造型,美容,美髮,整形,造型,美容,美髮,整形,造型,美容,美髮,整形,造型,美容,美髮,整形,造型,美容,美髮,整形,造型,美容,美髮,整形,造型,設計,室內設計,裝潢,房地產,設計,室內設計,裝潢,房地產,設計,室內設計,裝潢,房地產,設計,室內設計,裝潢,房地產,設計,室內設計,裝潢,房地產,設計,室內設計,裝潢,房地產,設計,室內設計,裝潢,房地產,設計,室內設計,裝潢,房地產,進修,在職進修,MBA,EMBA,進修,在職進修,MBA,EMBA,進修,在職進修,MBA,EMBA,進修,在職進修,MBA,EMBA,進修,在職進修,MBA,EMBA,進修,在職進修,MBA,EMBA,進修,在職進修,MBA,EMBA,住宿,民宿,飯店,旅遊,美容,美髮,整形,造型,設計,室內設計,裝潢,房地產,進修,在職進修,MBA,EMBA