To countless Indian micro, small, and medium enterprises (MSMEs), secured lending is a burden which often hides the price a borrower pays for lacking credit history. Securing credit for such MSMEs is painfully fraught with exchanging collateral for a loan—gold, loans against securities, property, and basically anything that assures the lender of repayment.
And those with feeble credit history are often sidelined and often find recourse with unsecured loans at higher than usual interest rates. In most cases, since the lender assumes a more manageable credit exposure, the asymmetry, despite being uncomfortable, is how credit has been extended.
