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The Business of Financial Inclusion

The discussion on financial inclusion ought to focus a lot more on building an economically viable and consumer acceptable business model, with a specially designed regulatory ecosystem appropriate for that model. Evangelism or moral pressure to force banks to serve those not so far served by them cannot help square a circle. But a new tetrahedron that is superior to both the circle and the square can be built if we abandon orthodoxy and do not constrain the business model by saying: (a) Financial inclusion has to be driven by banks because we know how to regulate them, and should not be driven by a new ecosystem that does not have an existing bank as the lead; (b) it has to be offered below a particular price point which is defined either by some fuzzy-logic comfort level or by a mandated number based on somebody’s test of reasonableness (not the […]

Innovate India’s Way To Modernity

In fact, the newer markets of the world often create a “champion’s disadvantage”, because most champion companies are prisoners of their past success formulae. They are far too deeply vested in every way in the religion and the ritual that they have built so far and the risk of change is real. The same applies to western academia, who have built knowledge based on the experiences of global businesses. Their predicaments are understandable. But it is puzzling why Indian business executives and thinkers, who do not carry any such baggage, don’t think differently and originally. Perhaps, we need to reflect on whether there is an incumbent advantage or disadvantage for reigning champions of the developed world. If they have an incumbent disadvantage, then the new kid on the block (Indian business) is not a challenger risking a bloody nose but a leading-edge innovator. It’s what CK Prahalad calls the “next […]

Drunken Man’s Walk

Unprepared for Our Consumption

Danger: A Vulnerable Consumer Base

Why are car sales zooming? Here’s an explanation. Because it is only the rich who buy cars – car penetration is a bit over 20% in the topmost quintile of Consumer India (i.e. the richest 20% of India), and 5% or less in the remaining quintiles. Car sales also come out of corporate pockets as much as out of consumer pockets in this segment of income. and Rich India is actually back to feeling comfortable – the stock market is back up again, and everyone is feeling secure looking at their NAVs climbing back. Banks are lending for car purchases again, corporate profits have been very good and tax planning time is near The economic typhoon seems to have mildly hit and then gone away, adding to an increase in level of this consumer’s confidence. Pragmatic consumption is back again, and a new car with a bank loan is a […]