The "Credit Crisis"

In desperate need for a cold, refreshing drink after spending the majority of the afternoon in the scorching, hot sun, I walk across the street to buy myself a Pepsi.  After a few sips of blissful, sweet, cold, I search my jhola (that's what they seem to call my purse here) for my wallet.  But of course, I forgot it at home.  'Koi baath nahi, kal dede naa (don't worry, give it to me tomorrow)'.  Embarrassed that I had to leave without paying, I make sure I go back the next day to pay.  It didn't take me long to realise that this was perfectly acceptable here.  As businessmen know their customers personally, giving credit is expected, maybe even required.  

How can small businesses, shops, services in Bagar even compete with the facilities and choice in Jhunjhunu, Chidawa, and even Jaipur?  Yes, Bagar may be closer, however people can easily travel the short distances for a good or service.  Credit, according to me, is one of the most significant USPs for many businesses in Bagar.  Customers are often are not able to pay the full amount all at one time and so what can be better than being able to purchase a good or service on credit, with no interest, through personal contacts.  The question is; when does it become too much credit? i.e. the 'Credit Crisis'.  

As part of the initiative to encourage entrepreneurship in Bagar, we have been helping several entrepreneurs start and establish their businesses.  One of them is an 18 year old boy, Sushil, who aspires to sell computers in villages.  This is not quite a start-up as Sushil has already located suppliers in Jaipur whom he works with and has sold quite a few computers to customers in the past years.  Our aim is to make this less of an in house thing to do in his free time, and develop a professional, operating business.  

The largest problem Sushil faces in sustaining the business is the issue of credit.  Villagers cannot pay for computers in one installment, because if they could they would go to Jhunjhunu's or Jaipur's computer showroom and purchase one on the spot.  Sushil ends up spending the majority of this time chasing after people.  As most of his customers are family, friends or friends of family, an added complication arises by having to balance the personal and professional aspects of the situation.  

This business has significant potential, as the demand for computers in the villages is increasing quickly.  Credit is one of Sushil's strongest USPs, but simultaneously the one factor that has prevented growth.  To be able to expand and flourish in line with demand, Sushil will have to overcome this fundamental issue.  Is there a solution to this 'Credit Crisis'?  A solution where Sushil can provide credit, but simultaneously encourage / force customers to pay their installments on time?