The most important and perhaps the most significant amongst the public policy moves in this direction were the experiments to do away with guarantees and collateral and move from “security based lending” to “purpose based lending”. The entire development of entrepreneurship would not have been possible if this transition had not taken place. 4.
The underlying thoughts in this policy intervention were that credit and finance were instruments of empowerment. By unfettering credit from security, those who were able and willing, creative and talented would not be constrained by lack of funds. The security for the funds lent would not be physical assets but the discounted value of cash flows that the enterprise would generate.