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Dhanalakshmi Bai, a tailor by profession, is a widow and her son were unable to land a decent job since he had to undergo an amputation following an accident.
She posted her picture along with her need to start a tailoring shop on the Tata Capital website. The company posted the story on its Facebook and Twitter pages. She got over a thousand likes ( salaams ) for the story and was offered loan by Tata Capital to set up her shop.
Known as ‘Salaam loans’, these were launched by Tata Capital in May 2017. Rolled out as part of its ‘Do it right’ campaign, the company seeks to tap the potential market in the unsecured lending segment and help those who fall outside the conventional financial system.
Under this scheme, loans are disbursed to individuals who get the maximum ‘likes’ (or salaams ) for their pictures with texts or videos (stating the need for finance) sent to the company.
The criteria for getting salaam loans are that the applicants should belong to the economically weaker section (EWS) and/or low-income group (LIG) with a total annual household income of ₹3 lakh. The stories should cross over a 1,000 likes and the applicant should be minimum 21 years of age and a maximum of 60 years.
According to Veetika Deoras, Chief Operating Officer – Digital, Tata Capital, “People come and like these stories and we have called these ‘likes’ salaams . Why? Because people give a salaam to their spirit and their stories. It is a democratised lending system. If any story crosses the said number of salaams , we process it for a loan.”
The company has done away with the application form and the credit underwriting process as it wants to provide loans to those people who have no access to financial support.
“We get about 700-800 stories because the loans are offered at a heavily subsidised rate,” says Deoras.
The company offers interest at a discounted rate — that is, cost of borrowing plus 1 per cent. The loan amount usually ranges between ₹25,000 and ₹1 lakh and the tenure for repayment is five to six years.
“The whole idea is to take a softer stance towards these people as nobody actively lends to this section. We recently disbursed a loan to a small shopkeeper who makes bags. What will be interesting to see is how these loans have performed after a year,” says Deoras.
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