Why Global Finance Got Into Trouble in the First Place

Have you ever wondered why global finance got into trouble in the first place. For decades, we mortals in India, were lectured on why our business models were unsustainable. We did not have the 'process' or 'systems' as a manager in GE Money put it to me in 2004 during the course of my field-work. Owners of Indian companies (referred to as 'partnerships') in contrast would constantly tell me that while their (the local partnership) model survived on the fact that they knew the inside out of their clients and had withstood economic cycles of nearly everykind, the national and international companies would not last long. They depended too much on a mechanical way of doing business. How could a finance company that set targets for loans every hope to get back their loans.

The picture below provides the best answer to the GE's problems. They decided that the best way to expand in India would be to push credit everywhere. 

Who knows, you would probably be willing to contemplate a loan when filling your petrol tank! This finance company in a petrol bunk is probably the best barometer to an unsustainable mechanical model that is often peddled as 'systems based process'. I am sure at that juncture, GE thought it was the type of  aggressiveness' that they needed from their 20-something employees. Hopefully, at least now, our management consultants understand that business success depends on understanding the local needs and conditions that exist in a particular region. The faster they understand to the limits of a 'systems based process' the more successful they will be in the business world.

Little wonder that GE decided to sell out in India. 

One would only wish that at least henceforth, they would understand the basic business logic of the fianance business that when you push credit to those who cannot hope to repay it, you are not doing a service and instead you are inviting trouble. That basic understanding would have served the world trillions of dollars.These trillions could probably have been better used if only our policy makers had decided that would come up with long-term solutions to the problems of the availability of finance.