Monthly Business Review - December 2019

According to a study in 2015 by the Boston Consulting Group, the middle and affluent class (MAC), which includes households that earn at least USD 401 (or BDT 34,000) per month or higher, in Bangladesh is expected to grow to 34 million in number by 2025. Which means, in the coming years the demand of the consumer durables will increase significantly.

Question may arise out of all the consumer electronic durables, why only financing of white goods (large machines with an enamel finish; for example: refrigerators, air conditioners, washing machines, microwave ovens etc.) is more focused here. The answer is simple, it’s growing demand. Even a few years ago air conditioners or microwave ovens used to be a sign of luxury but now a days such products can easily be categorized as necessity. One of the reasons behind such rapid growth in usage can be increased purchasing power but the role of nuclear families or working women cannot be denied. Convenience is the biggest selling trait of any product in the modern world.

Although the middle income class has drastically risen in the last decade, people are not comfortable spending large amounts of money at once. India has achieved a praiseworthy expertise in case of white goods financing. 60% of the total sale are now made through specific financing instruments out of which only 12-15% is via credit card. With the blessings of data analytics and alternative credit scoring, India is now capable of analyzing a client’s credit worthiness within few minutes which helps them to cater the growing need efficiently and this is where we have a great scope for improvement. However, to achieve such expertise, the first and foremost requirement is infrastructural development and expertise on data analytics. Moreover, regulatory incentives are also necessary to reach such accomplishment.