“Collateral trap: Tomorrow’s businesses can’t run on yesterday’s lending rules”, Firstpost, 01 Oct 2026.
“India’s growth story has a financing contradiction that deserves more attention. A country short of capital should, according to Solow-Swan growth model logic, offer attractive returns to investors willing to deploy it. Yet Indian businesses often pay substantially more for capital than comparable borrowers in developed economies.
Some of that premium is justified by inflation and risk. But after years of working at the intersection of business, finance and highway hospitality, I believe the larger problem lies elsewhere: Indian lending still relies too heavily on what a business owns, and not enough on what a business can demonstrably earn.
India is among the largest and fastest-growing economies in the world, rich in young workers and market potential. But potential alone does not turn into profit. Doing business here means cracking the code of volume. Margins are thin by design; fixed overheads, expensive real estate, and a high cost of capital together erode the unit economics of almost any venture. Scale is the only reliable cure, yet scale runs on capital. Outlets, inventory, and working capital all have to be funded today and repaid tomorrow. To escape this vicious circle of thin margins, a business needs more money precisely when it has less to offer, a loop that is cheap to close in developed nations and expensive to close in India…………”
Read the full article at Firstpost.
