EASY INSTALLMENTS BUSINESS
Many people who have been doing the "easy installment" business in Karachi have now entered into taking running items of electric and electronics on credit from dealers
By AZAM ALI
July 26 - Aug 01, 2004
About sixty percent of Karachi population, living in lower class localities and Katchi Abadis are the exact real target for "consumer financing" which were first rightly focused and captured years ago by the small private groups and individuals providing consumers goods on "easy installments basis" at lowest level.
"These are the people who cannot afford to buy the items of their necessity and small electric appliances, electronic equipment like television sets, cassette players, irons, washing machines, pedestal fans, VCRs and furniture items" said a small consumer financer in a Katchi Abadi of lower Gizri adjacent to DHA. He further said that their monthly income is low that only 10% of the total population of Katchi Abadi can hardly afford to buy television sets and similar items on cash payments but for that they wait for long time for financial arrangements. "Now my financing business has spread into six localities in Karachi and I have set up showrooms of more than 100 different samples. Apart from employing a dozen persons of labor class and Munshis (Clerks)," he added.
Another financer said that there are two types of clients one who are honest and want to pay the installments when they have money with them and other who do not have sense of responsibility to pay the due installments even they have money in their pocket. This is the single point which is the backbone of this business. Only this basic thing I need to ascertain from the client when he first comes to my shop. "Eighty percent of the total lenders or clients do not want to go through documentation, they get the item, pay the installments and that's all."
Value and credibility of the introducer is another major fact, there are some notable in every locality but they do not introduce any client who has bad credibility or new in the area.
These financers started business in lower class areas and Katchi Abadis when commercial banks had no concept about financing for small item worth Rs. 1,000 to Rs. 5,000. After realizing the fact of this huge volume of market some businessmen have started consumer financing at the lowest level which still remain an open field for them. They are the actual people who even cannot afford a pedestal fan of Rs. 800 to Rs. 1500, how can they think about any electric appliances worth five to 20 thousand rupees or above.
The financers who initially started giving electric appliances now have entered into lending money at different rate of interest. Now they lend money for any thing, not only for furniture and other items for a bride but even now they lend money to a needy person who needs Rs. 2,000 to 25,000 in emergency circumstances and for medical treatment.
These financers spend their maximum time in the localities where they have their business; this is the best advantage for them which gives them the idea about the credibility of each residents and clients. One of the financer in Shirin Jinnah Colony said that first he started business when there was a craze of VCRs. After 10 years he included many more items in the list of "easy installment" business and now he virtually feels as a member of many families in his localities, he has also started personal counseling to individuals for selecting electric appliances and electronic equipment for their homes. Many people who do not want to take any item on easy installment but contact him in order to choose a brand of electric appliances.
Another showroom owner and financer in North Karachi said, "I had never thought in my life that I would have knowledge of computers as I have today because nowadays financing on computers is on fullswing as hundreds of people have taken computers of different kind on easy installments and therefore I know what is a branded computer, what is unbranded, I have now sufficient knowledge about of P-I, P-II-, P-III and P-IV. He said, "Now I am keeping clients record in my own computer which I have learnt from few clients."
Bashir Ahmed, a resident of a Katchi Abadi Hijrat Colony near Bath Island who has bought many items from a small shop in his area on "easy installments" when asked why he did not go to any bank for financing or an institution of consumer financing? He replied in an interrogative sentence, "why should I go through documentation and search for guarantees when I can get the same from a man who is providing same facilities in my own area for last fifteen years and we know each others he also understand even if there is any problem and if there is any delay in paying installment.
Similarly, when a financer on "easy installment business" in the same areas asked "why the documentation is not necessary? he replied " when I know the client is an honest one and never delays paying installments on due dates without any serious reason, why should I put myself and my client into unnecessary procedure. He further said that look at the high profile bank defaulter cases, had not they gone through a complete documentation and guarantees etc. they had provided even government laid down requirements, but they defaulted because they did not want to repay.
Many people who have been doing the "easy installment" business in Karachi have now entered into taking running items of electric and electronics on credit from dealers. These items include pedestal fans, TV sets, irons, mobile phone sets, VCD players, computers, washing machines, various items of furniture, sewing machines and even expensive toys of children.
According to City District Government Karachi (CDGK) statistics 52% of total population comprises in Katchi Abadis and slum localities with three to eight persons each in a residential unit. And their income per month is very low. However independent sources in Sindh Katchi Abadi Authority (SKAA) and Sindh Government said the number of Katchi Abadis, population is higher and their income is much lower than what the government statistic say.