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It must have been around 1980. There was a small, slightly
overwhelmed woman making her way up a street in the Chickpet section
of Bangalore, India. Chickpet is one of the major commerce hubs
of that city, and the best way to describe Chickpet is a patchwork
of crisscrossing streets, each of which safely holds one lane of
one-way traffic and one sidewalk for pedestrians. Unsafely though,
these streets can hold two lanes of opposing traffic, two sidewalks
for pedestrians and one for roaming goats and cows. This second
configuration was the one my grandmother was traversing. Playing
chicken with cars as a pedestrian is the norm in some parts of most
Indian cities. In Bangalore, Chickpet is the big-leagues for that
game and my grandmother was faring well.
She was in Chickpet for one very specific reason,
to use the two thousand rupees she had in her purse—money
she had borrowed from my grandfather—to set up her first-ever
relationship with a sari wholesaler. Sari wholesalers lived in Chickpet,
and my grandmother was going into business.
The steps that led up to R.K. Sari Wholesalers,
like the steps that led up to every second-floor business in that
part of the city, were lit by a lone light bulb mounted on the wall
of the landing half a floor up. As she walked up those steps on
that day, I have to assume that she was already starting to feel
the arthritis that has now taken full ownership of her knees. If
she did, then it was a kind of birth pain for her business: Chandrika
Textiles. It was a pain she would endure every two weeks for the
next fifteen years.
The success of a sari sales business is not a
foregone conclusion. My grandmother attributes hers to hard work,
a savvy understanding of the sari market and the fact that she was
able to fully share the stresses and responsibilities with my grandfather.
She tends to downplay the explanation I like to give: every other
year for three months during summers, the business got massive infusions
of capital in the form of free labor from me and my sister. Imagine
an eight- and ten-year-old running rampant through a house, littering
it with screams and half-finished cups of milk and then occasionally
sitting down in a wicker chair next to a customer for a few minutes
to say things like, "That color looks wonderful on you Aunty."
We were charming.
In truth, the success of Chandrika Textiles was
rooted in the struggles my grandmother endured raising her family
with little money while having to keep up appearances. In India,
saris are more than just a piece of clothing. They're a necessary
component in the culture of gift-giving that exists for all manner
of religious occasions. Countless times in her life, my grandmother
experienced the frustration of her already-meager savings wiped
out by the surprise announcement of a wedding or baby-birth.
She was not alone in that frustration. My grandmother's
insight was to create a business that made life easier for people
like her.
From the beginning, Chandrika Textiles distinguished
itself from most other sari-selling operations in one very specific
way. My grandmother allowed people to buy saris in installments,
interest-free. She could afford this because she ran her business
out of our house in Bangalore. She had no overhead, and her only
capital costs were two metal cabinets filled with saris. And when
times got tough for customers, they were allowed to pay whatever
they could afford, whenever they could afford it.
This kind of plan appealed to all manner of customers,
including customers without much money—or, as they are classified
in credit markets, sub-prime. Offering sub-prime loans, as it turns
out, is not necessarily a recipe for disaster. There are two types
of sub-prime loans, and my grandmother only offered one of them,
which is the type that people could afford. In the fifteen years
Chandrika Textiles was in business, my grandmother was able to count
on two hands the number of people who did not pay her back.
My grandparents live in America now, and Chandrika
Textiles is long a part of history. But even now, when I go back
to the part of southern Bangalore from where my grandmother drew
her customers, I may be stopped on the street and thanked by someone
unfamiliar who remembers me running around as they bought saris.
Saris they needed for weddings and religious ceremonies. Saris they
could not have afforded without her.
If there are any lessons to be learned from my
grandmother's experience as a lender, they're simple. I doubt she
would have had such low default rates if the likes of Bear Stearns
and Citibank were funneling her money, encouraging her to put women
into saris they could not afford. Offering bad loans becomes easy
when you're giving away other people's money. My grandmother was
always giving away her own, so she was forced to develop a really
good sense of people, which meant doing something the big banks
apparently found unnecessary: getting to know her customers.
But it is also possible that hard work and good insight alone cannot
fully explain her consistently reliable customers. In fact, as my
grandmother tells the story, she was also helped along by a universal
force that pervades this world. It's a force that gives women like
her a competitive advantage over others--the feeling of guilt people
have when they stiff a kind old grandmother.
Nikhil Tilwalli is an engineer, who often likes to write about politics and society. He lives in Washington, D.C.
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