Lending is one of the oldest financial practices in human history. While technology and financial instruments have evolved, the fundamental truth remains unchanged: lending is a business of collections. The true skill in lending is not in giving out money but in ensuring that it returns—consistently, predictably, and profitably.
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This wisdom was well understood in ancient Babylon, the world's first great commercial hub. The Richest Man in Babylon by George S. Clasonl provides profound insights into the art of wealth, money management, and lending. Through its timeless parables, it teaches us the fundamental rules that any lender—whether an individual, a bank, or an NBFC—must follow to ensure successful collections.
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Let’s explore why lending is the business of collections and uncover the secrets of lending through the lens of Babylonian wisdom.
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Lending is the Business of Collections: Lessons from Babylon
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In ancient Babylon, moneylenders were respected figures, but they did not lend blindly. They knew that the act of lending was incomplete until the money returned safely. Their approach to lending was based on three key principles, which remain relevant today:
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Money Must Always Return to Its Source
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In The Richest Man in Babylon, the wise moneylender Mathon says: “Gold in a lender’s purse must be guarded with firmness, else it be lost.”

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This simple lesson underscores the most critical aspect of lending: if repayment is uncertain, the lending itself is flawed. A lender’s business depends not on how much they lend but on how much they collect.
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Modern Application:

• Lenders should not just disburse loans; they must build mechanisms that ensure structured, timely repayments.

• Collections must be proactive, not reactive—the moment lending begins, a repayment plan must be in place.
• Data-driven underwriting must be complemented by behavioral insights to ensure borrowers are capable and willing to repay.
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A Loan is an Investment, Not a Gift
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Clason’s stories emphasize that lending must be done wisely, not emotionally. In the book, Rodan, a spear maker, receives gold and is tempted to lend it to his sister’s husband, who has no means to repay. The money lender advises him:
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This teaches that a loan must be treated as an investment—the borrower must have the ability to return the money with certainty.
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Modern Application:

• Alternative data (cash flow, transactional history, business patterns) should be used to predict repayment behavior.
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• Pre-loan assessment is as important as collections.

• Borrowers must be screened for financial discipline, not just their immediate ability to pay.

The Borrower’s Character Matters as Much as Their Ability to Pay
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Babylonians understood that lending was not just about financial capability but also trustworthiness.

Mathon, the money lender, says: “Better to lose a little silver to a man who will not pay than to risk much gold with one who will not honor his word.”
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A borrower who has money but lacks discipline is riskier than one who has limited funds but is committed to repayment.
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Modern Application:

• Lending institutions must evaluate not just the financial history of a borrower (credit score, bank statement analysis) but also their behavioral history.

• Data-backed trust-building is key: when lenders engage borrowers meaningfully from the start, it sets the tone for future collections.
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The Secrets of Lending: Timeless Wisdom from The Richest Man in Babylon
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Babylonians did not just lend and hope for repayment—they had structured strategies that ensured success. Here are the three golden rules of lending, as inspired by Clason’s book.
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Ensure That Borrowers Have a Clear Path to Repayment
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“Where the determination is, the way can be found.”
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Lenders in Babylon ensured that a borrower had a reliable source of income before approving a loan. The same principle applies today.
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Modern Application:

• Instead of just evaluating income, lenders should analyze cash flow consistency—for example, seasonal businesses need flexible repayment plans.

• Digital repayment tracking should be implemented—borrowers should get periodic nudges that reinforce the importance of on-time payments.
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Create a Relationship, Not Just a Transaction
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Babylonian lenders understood that borrowers who felt personally connected to their lender were more likely to repay.
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Modern Application:

• Instead of impersonal calls or automated messages, lenders should use a humanized approach in collections.

• AI-driven chatbots and personalized messaging should be designed to engage borrowers rather than just remind them of dues.

• Loan officers should establish rapport during onboarding—collections begin with how the loan is framed from day one.
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Protect the Principal—Never Lend Without Security
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“Gold flees the man who would entrust it to the uncertain.”
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In Babylon, lenders never gave money without ensuring some form of security—either in assets, future earnings, or strong guarantees.
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Modern Application:

• While collateral-free lending is common today, alternative data and risk mitigation strategies must act as modern "security."
• Behavioral scoring, payment patterns, and business analytics should predict repayment risks before defaults happen.
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Dynamic risk-pricing models should reward timely payers and adjust lending terms based on borrower behavior.