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Can loans against anything deemed valuable to the borrower and lender be possible?

Worldwide consumers spend nearly 1.5 trillion USD in buying financial and non financial assets both movable and immovable. A major chunk of these assets does not contribute to wealth creation or an addition to users' portfolios that may return additional income in future. These are non-financial assets. In banking terms such assets are practically non valuable assets or non cashable assets and are usually termed worthless. Much of these assets are classified as recreational possessions. However merely being classified as an asset that cannot be easily converted into cash cannot define its worth. For example iPhone, luxury watches, cars and bikes serve a very useful purpose and are considered as status possessions with a good resale value in a pre-used market. Such assets don't hold a precise monetary value but are valuable or could at least be valuable for a certain period of time due to various factors coming into play like demand and supply, depreciation expiration of technology etc. but still technically the assets hold value which is why the retail price was determined. So it's not just cost of production and other factors that sets the value of an asset but another largely felt to be camouflaged deterrent is the future value of the asset where other factors come such as brand equity and goodwill. Such assets can serve as equals to other cash loanable assets for a short period of time at least. These assets have been majorly ignored, sidelined and unacknowledged primarily because of ignorance and unwillingness or non intent to accept as loanable. There has been no will from banks and institutional lenders to accept such assets as loanable not because of unreliability of assets or maintenance issues but simply i feel circumstantial, and so users are made to part ways with such assets.

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Sudeep Nagpure

Sudeep Nagpure

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Plot No- 20, Sector-1

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31 Oct 2020

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Navi Mumbai

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