Thursday, June 21, 2007

Why Wal-Mart Will Help Finance Customers

But financial-services experts view this as a positive for the industry that might inadvertently clean up some of its usurious practices. Wal-Mart caters to customers with little or no access to banking services, people who are often described as the "unbanked" or "underbanked." According to ACNielsen, 42% of Wal-Mart shoppers have yearly household incomes of less than $40,000. Many of these consumers pay high fees to subprime and payday lenders for cashing checks and receiving credit. Bank consultant Ely says that those money services and transmitters ought to fear Wal-Mart's expansion. "Wal-Mart will bring increased efficiency and bring down prices," says Ely.

Wal-Mart already has brought on a bonanza of savings for consumers. Wal-Mart says it conducts more than 2 million money-services transactions a week. Last year, customers who used Wal-Mart's services saved an average of $450 a year, or nearly $40 per month, the company said. The opening of additional Wal-Mart MoneyCenters will put more than $320 million back into customers' pockets, according to the retailer. Plus, some consumers are acquiring new financial skills. "As we piloted the card, we were happy to see how quickly our customers began using it to manage their money," says Thompson. "They immediately understood the value and how to take advantage of benefits, such as direct deposit or loading their paychecks in our stores. The acceptance has been exciting to watch because it means we've met a real need for our customers."


yogijp said...

ICICI's share sale is half the $10 billion the nation's banks plan to raise in the year through March 2008 as they seek to benefit from rising demand for credit. The bank has doubled its profit during four years of at least 8 percent economic growth in the national economy by lending more to India's 300 million-member middle class.

ICICI, which makes two-thirds of its loans to individuals, expects to increase lending to Indian companies that are expanding abroad with acquisitions, and to a rural economy that's home to more than 600 million of the nation's 1.1 billion people.

yogijp said...

Islamic financing debuts in India

Islamic financing does not permit the lender to charge interest against loan. Shariah forbids any fixed return on capital, so charging or receiving interest is ruled out. The financing or loan is provided on a risk-sharing basis, which is in compliance with the Islamic laws. The returns on Shariah-compliant lending involve a share of profits earned by a borrower.