Indian businesses and entrepreneurs are provided credit by a plethora of sources, which includes Foreign Banks (FBs), Public Sector Banks (PSBs), Old Private Sector Banks, New Private Sector Banks, Cooperative Banks, Non-banking Financial Companies (NBFCs), Un-incorporated bodies (UIBs), relatives/friends, etc.

The form and size of the organization decides the source. If it is a proprietorship or partnership it uses non-banking channels compared to a large public limited listed company which uses PSBs and, or FBs. The size also mostly decides the rate of interest. A flower vendor gets funds at much higher rates compared to the listed companies. Not only that, there are problems associated with access to funds.

Nagamma has been a flower vendor for more than 20 years in a suburb of Bangalore. Several times, she joined informal chits to save some money and generate loans during need. Many times, the persons who ran the chit just disappeared. She was advised by a well-wisher to open an account with a commercial bank for saving her hard-earned money and perhaps get a loan later. The branch manager who was a pleasant lady knew the flower vendor for many years. But the Core Banking Solutions (CBS) with its Central Server located at Davos or Basle will just not recognize Nagamma and her ilk even though the manager knows her. It was pointed out that the system decides about accepting new customers under the `Know Your Customer' (KYC) model. If the manager knows the customer then it is not enough; the system should recognize her using Multi-Factor Discriminant Model of Non-linear Credit Rating. Nagamma was asked photos, proof of address, pan number, proof of date of birth, and references and was also given exotic choices such as using debit card and Net-based banking. It is sad that banks have moved away from the community-based recognition of new customers and particularly small entrepreneurial classes. Of course, some one suggested about no-frill banking for which forms are getting organized to generate more thrills.

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