Banking to bridge the gap
SHOBHA WORKS as a housekeeper in Bengaluru (formerly Bangalore), the largest city in southern India. She rides the family’s motorbike down crowded roads on her way to work, weaving past cars, bikes, and the many colorful vendors that line the streets of this city of 8 million people.
Housekeepers in India earn about $2,250 a year. Shobha’s husband works cleaning tiles, but this doesn’t always guarantee a steady income, so she bears most of the responsibility of caring for their family. There is food to buy. Rent. Clothing. And there are medical expenses to cover. Shobha wants to be sure her son and daughter can complete their schooling, but education in India is different from the United States, where public school education is free. Depending on the school, annual fees in India can cost anywhere from $1,250 to $1,500 USD. It’s a steep sum for an Indian worker who earns somewhere between $2,000 to $4,500 a year.
Guardian is a cooperative bank, owned by its members and not established to focus solely on maximizing profits.
Faced with overwhelming financial burdens, Shobha borrowed money from a predatory lender without understanding the terms of the loan.
Collin Timms, the founder of Bengaluru’s Guardian Bank, has seen situations like Shobha’s many times before.
“The lender tells them, ‘All you have to do is pay me back the interest,’” Timms said. “The interest is quoted as a percentage point per week or per month. Very often the borrower is not able to do the math to realize what this translates into.”
When borrowers are only paying interest payments, they aren’t making any progress toward repaying the principal of the loan. And with compound interest, the loans quickly exceed what a borrower is able to pay. Throughout India, many customers like Shobha cannot read or write, and they do not understand the terms of their debts.
In addition, the distressing circumstances that prompted them to seek a loan can cloud their judgment. Many end up borrowing at incredibly high interest rates, which puts them on the hook to repay significantly more than they originally borrowed.
“At best, it inflicts a huge penalty for being poor,” Timms says. “At worst, you will become the slave of the lender forever.”
With this in mind, Timms founded Guardian Bank in India in 1998.
Timms was the son of a factory worker. His family lived in factory quarters on a campus of 1,500 people, with only a few Christian families around them. While his lower-middle-class family struggled, Timms watched some friends enjoy luxuries like cars, refrigerators, or televisions that his family could not afford.
“In any community, there will always be those who have and those who don’t. As a bank, you are a bridge between the two.” — Collin Timms
Timms says his childhood deeply impacted his work ethic, drive, and how his career unfolded. Although he earned an engineering degree, his real passion was business. He started businesses in the fields of financial services, software, health care, and education. By the time Timms reached age 30, he was a highly successful entrepreneur, but instead of collecting luxury cars or accumulating even more wealth, Timms started to think about how he might help others.
“I began to feel that I’m blessed, and I don’t deserve all these blessings,” Timms said. At first, Timms got involved with the Bridge Foundation, which is one of the oldest and largest organizations in India that gives small loans to help people out of poverty. Soon, he realized that microenterprise organizations like the Bridge Foundation needed banks to fund them.
Timms went from church to church to gather the funds and support to start Guardian Bank. Unlike commercial banks, Guardian is a cooperative bank, owned by its members and not established to focus solely on maximizing profits.
“Normally, in other banks … you bring your income statement. You bring certain documents. Unless you have a certain salary, you are not able to avail credit from a bank,” said Guardian Bank CEO Sharon Joseph. But this bank is different.
Timms wanted to create a bank where finance and credit would be available for low-income customers who wouldn’t otherwise qualify. “We want to take a more humane view and see how we could help them,” Joseph said.
“I can tell you examples of people who have medical problems and many of them didn’t have even medical insurance. Then you have families where they wanted to fund their children’s education,” said Joseph of the bank’s loan recipients.
Guardian’s mission connects deeply with both leaders’ Christian faith: Building a business that doesn’t just maximize profits for a select few, but channels that money to help people who are struggling financially.
Timms remembers feeling God’s presence throughout the process of founding Guardian Bank. “You feel that you’re being led. Every circumstance, every meeting, every person you talk to,” he said. “I had no idea how it would pan out, but I felt that I was being led.”
Today, Guardian Bank has more than 30,000 customers throughout its five branches in Bengaluru. It was the only bank in India to offer a reduction on interest rates in response to the COVID-19 pandemic, providing a 50% rebate during India’s 45-day lockdown period.
When Shobha arrived for her appointment at Guardian Bank, she explained her situation with the loan shark. “Can you help me?” she asked.
Guardian Bank repays the money lenders, Joseph explained, then it has customers like Shobha pay them back in manageable monthly installments at lower interest rates. This time, they’re paying not just interest, but the principal is reduced as well.
Joshua Prabhakar is a small-business owner focused on design work. He’s been banking with Guardian for more than two years. “It’s not easy getting loans,” Prabhakar said. “Guardian was a breath of fresh air for me.”
Francis Xavier of Rehoboth Media has been a customer at Guardian Bank since 2007. “This is a friendly bank,” he said. “Moreover, it’s a Christian bank, not only for Christians but the non-Christians, also.”
Joseph, a Bible study leader and an active member of her local church, was excited for the opportunity to integrate her faith and career. She has been the CEO of Guardian Bank since 2000.
She remembered a young man who took out a loan in 1999 for $180 to start a small business selling noodles and other items on a street corner. “Today he is completely debt-free,” she said. “This man bought a house and is renting out other houses for additional income.”
Timms relishes his role in being able to help those in need. “In any community, there will always be those who have and those who don’t,” Timms said. “As a bank, you are a bridge between the two.”
“What is very powerful is to realize this bridge can be pivoted,” he said. “We could … maximize profit into places where it doesn’t do the best good, but we choose not to do that. We pivot the bridge — by our integrity, by our faith, by our Christian values — to put the money into the hands of people who it will really help.”
Illustration by Scott Anderson