NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, October 20, 2016

Billionaire Uday Kotak did something unusual last month. He signed off on his Kotak Mahindra Bank valued at Rs 1.4 lakh crore for buying BSS Micro Finance, a tiny lender which does not even have 1% of the assets the bank has.

And Kotak is not alone in the hunt for companies which make money out of lending to people who need a few thousand rupees to do their business – like a vegetable vendor, a carpenter, or an auto rickshaw driver. Those who minted money lending to businessmen inSouth Mumbai and in New Delhi for their BMWs or Mercs, are setting their eyes on towns and villages like Sanchi or Mettur. At last, the big banks in India are beginning to act on management guru CK Prahalad’s ‘Bottom of the Pyramid’ story.

Things may be falling in place for small towns and villages which have been credit starved despite the lofty principles of making credit available to everyone on which banks were nationalised.