Indian Banking Tycoon Made Millions Lending to the Poor

An Indian banking tycoon renowned for offering low-interest loans to people without bank accounts or credit histories says the practice is not as risky as many in the financial sector assume it is.

R Thyagarajan, who extended credit lines to India’s rural poor to buy trucks and tractors, told Bloomberg in a rare interview that there is nothing unusual about his approach to finance.

While he amassed great wealth over time, he told the publication his intentions were at least in part altruistic.

The financier described himself as a “leftist,” and said he provided loans because he wants to help people.

“I was never enthusiastic about making life pleasanter for people who already have a good life,” he told Bloomberg. “I wanted to take away some unpleasantness in the lives of people who are getting into problems.”

However, Thyagarajan’s decision to lend to the unbanked proved a lucrative one.

Around a quarter of India doesn't have access to the country’s formal banking system and around a third of those who do have bank accounts do not use them, according to World Bank data.

Thyagarajan got his start in the banking world making informal loans to Indian farmers to buy needed vehicles. 

He eventually founded the Shriram Group, a conglomerate that provides banking services, life insurance and asset management, among other things.

The company’s net worth is around $8.5 billion, according to Bloomberg.

At 86, Thyagarajan is semi-retired and has moved into an advisory role at the company he founded in 1974.

The financier has been recognized for his philanthropy. In 2013 the Indian government selected him for the Padma Bhushan award, the nation’s third-highest civilian award, according to the Economic Times.

While Thyagarajan is a noted philanthropist — he gave away more than $750 million to employees, lives in a modest house and drives a $5,000 car, according to various news reports — his career is not without controversies. He paid some of his employees below market rates and said they were still overpaid, Bloomberg said.