An Indian entrepreneur based in the United States has compared the banking systems of the two countries, claiming that the US comes out on top due to American banks’ willingness to take calculated risks. Shreyans Jain, co-founder of Y Combinator-backed Manicule, shared an X post contrasting the two countries from the perspective of a borrower.
Jain claimed that in the US, borrowers with a decent credit score and relatively short credit history can access substantial loans. In India, on the other hand, banks demand extensive documentation and remain highly risk-averse even when the borrower has strong finances.
“India vs the US”
In his X post, Jain said his experience of dealing with banks in the two countries could be indicative of the direction where these countries are headed.
“My experiences dealing with banks in India vs the US differ so wildly and it tells you a lot about where the countries are going,” he said.
The Indian entrepreneur claimed that are more willing to hand out substantial loans. “If you walk into a US bank or credit union, all you need is a decent credit score and a short credit history to get a loan worth many times your annual income,” he said.
In India, getting even a small loan requires a long list of documents.
“In India you need great credit score, long credit history, income tax return, income tax computation, , CA approved net worth statement, business balance sheets, business tax return and the list is possibly infinite,” Jain said. “And then you get denied a loan worth barely 3x your annual income and a small fraction of your net worth (with a 7 year term).”
Why India lags behind
The founder of Manicule claimed that banks’ aversion to hand out loans is one reason why India lags behind when it comes to creating global companies.
He argued that the next Anthropic is unlikely to come out of India because Indian banks are too conservative and restrictive when it comes to lending.
“A credit starved country with zero banking risk tolerance isn’t going anywhere on the world stage,” wrote Jain. “The next Anthropic or Foxconn isn’t gonna come out of India and change the world with chump change.”
Post sparks discussion
“I received my first $2 million credit line in the US in 2011, even without an SSN. The US helped me professionally in ways India never did — and likely never would,” wrote Vishal Singh Jain in the comments section of the post.
“Bank loans don’t build tech giants – no major tech giants were founded or launched using traditional bank loans,” X user Archie claimed. “wasn’t built on credit or bank loan – it raised billions in venture capital & corporate equity investments (same for Amazon, Google, et all).”
To this, Shreyans Jain replied: “VC and credit are interlinked. Google, Amazon, etc. still borrow insane amounts of money while having VC and revenue. Credit is not simply a sustenance tool.”
“I totally agree, India needs a more reliable bank at the consumer level. Good software, customer service, and a bank that requires less paperwork,” an X user added.
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