Five things secured lending does today that don’t work.
None of these is a mystery to anyone who has run a lending book. They persist because the branch model requires them — not because nobody noticed.
Where the money goes
The borrower pays for a structure built for someone else.
A loan against property is a simple product: verify the business, value the security, lend, collect. What sits between those four steps is an apparatus of branches, hand-offs and commission-only intermediaries that exists because the industry could not think of another way to reach the customer.
Every rupee of that apparatus is recovered from the borrower — in the rate he pays, the weeks he waits, and the number of strangers he has to satisfy before anyone says yes.
Illustrative.
Branches are the hidden tax on secured MSME credit.
Traditional lending against property layers fixed infrastructure and repeated human hand-offs on top of a simple product — and still ends up with nobody accountable for the file. Evidence is re-keyed at every stage, and the person who met the borrower is rarely the person who decides.
How it runs today
What it costs
Credit assessment is manual, repetitive — and never learns.
The same documents are checked by many hands, and the two questions that actually matter — can this business repay, and will it — stay a matter of individual judgment. Nothing from how the loan behaved afterwards flows back into how the next one is assessed.
How it runs today
What it costs
Sourcing is uncontrolled, disloyal — and expensive.
Origination runs on intermediaries paid once, at login, with no stake in whether the loan is ever repaid. The incentive is to submit files, not good files — and the same customer is shopped to whoever pays most this quarter.
How it runs today
What it costs
The customer pays for all of it — in price, friction and churn.
Fixed branch cost, a large intermediated salesforce and manual credit all have to be recovered somewhere. They are recovered from the borrower: a higher rate than his security warrants, an instalment shaped by process rather than by his cash flow, and a relationship that ends the moment someone offers to refinance him.
How it runs today
What it costs
Branches cap reach — and make scale capital-heavy.
A branch is a fixed point with a fixed radius. MSME demand is not shaped like that: it is a dispersed field of thousands of small clusters across district towns. The branch model can cover the points. It can never cover the field — and every attempt to widen it costs real estate, capital expenditure and a hiring cycle before a single loan is written.
How it runs today
What it costs
Every one of these is a distribution problem wearing a credit problem’s clothes.
Which is why we started with who does the work and where it happens, rather than with a better scorecard.
What follows from it
Fix distribution and the rest becomes tractable.
Not all five problems are separate. Four of them are consequences of the first, which is why we did not try to solve them one at a time.
Remove the hand-offs
One local originator carries the customer from first conversation through to collections, instead of eight parties each holding a fragment and none holding the outcome.
Make the evidence portable
Capture the business once, in a form that a credit officer, an auditor and a supervisor can all read later — so nothing is re-keyed and nothing depends on who was in the room.
Pay for the outcome
Compensation that continues across the life of the loan rather than landing at disbursal, so the person who introduced the borrower still cares in month eighteen.
These are the five we set out to fix.
If you have run a book that lives with any of them, we would like your read on whether we have actually removed them or simply moved them.