Why can we not get a loan on current account in India?
Saw this random video in which Ashneer was asking the reason why no loans are available on current accounts in banks in India. Really made me think and I couldn't come up with any logical reason.
So many companies have cash reserves they build over time, what's the point of taking a loan or transferring that amount to different accounts instead of just using current account balance and getting an interest on it? It's not a taxable account, but the money is just sitting there with no interest accumulation or utility.
Thoughts? Are there any startups that are maybe addressing this problem?
That's because the bank knows the money in the current account will get used up when the company is not doing well and the risk associated with this kind of loan basically equates it to unsecured loan so they don't want to get in this kind of risk without any guarantee or collateral.
Kab Tak gold girwi rakhenge dukaan chalane ke liye saar
Yaar mere idhaar toh dukhan hi bank girvi rakhwa keh OD limit banate. I very well understand the plight of doing business but the system is messed up.
FDOD bana lo
Doesn't work because you have to break FD to be able to use those funds. Startups need cash on hand for possible emergencies.
Bhai I work in a startup myself, if you're having to break FDs which back FDODs to use emergency funds then you might as well have a hard look at your fund position, also beyond a point of ₹₹₹₹, all FDs become callable anyway
