New Delhi: The unique survey from across 12 cities of India across regions revealed that almost 67% of Indians were not opposed to taking loans especially if it fulfils their family’s desire or upgrades their lifestyle. The survey reveals other key aspects of borrowing patterns as well.
report was commissioned by Home Credit India, a local arm of the international
consumer finance provider with operations spanning over Europe and Asia and
committed to drive financial inclusion in India. This report has released a
fresh new perspective on India’s borrowing habits. This study conducted by
research agency Absolutdata has been commissioned across 12 cities and 2,571
respondents have been evaluated to provide a near to accurate pattern of
savings, spending and borrowing behavior in the country.
for the family! The desire to fulfil the needs and the wishes of the family
tops the reasons for taking a loan in the future: So
while lifestyle is important, respondents have revealed that fulfilling family
needs and their wishes constitutes the single topmost reason for people wanting
to take a new loan at an average of 46% nationally. Family orientation and
needs is highest among people in Patna (61%) followed by Lucknow (58%), Nagpur
(56%) and Jaipur (54%).
The second reason why most Indians are willing to take a loan is to Upgrade Their Lifestyle. The survey revealed that 33% of Indians are willing to take a loan for a consumer durable item such as- Mobile Phone, Television, Refrigerator etc. The other vastly popular loan categories are the two wheelers (23.3%) and personal expenses (20.3%). This is followed by is for purchase of Cars (12.5%), House (12%) and Gold (10.5%). When asked about the future, 33% of the respondents are likely to take it for consumer durables while personal loans are the next high interest segment at 28% followed by two wheelers at 22.8. Agriculture loans (0.7%), credit card EMI (1.1%), Travel loans (1.5%) and Medical loans (3.7%) are the lowest ranked categories of loans
City-Wise Breakup: 33% Indians believe that loans are important to enhance their lifestyle highest being in cities like Mumbai (49%), Jaipur (47%) and Chandigarh (41%). On the converse, lifestyle consideration is the least among people in Ahmedabad (19%) followed by Indore (19%), Bangalore (20%) and Kolkata (20%).
Friends and Family not only
feature at the top of the survey for fulfilling needs, they also play the most
important role in the decision making process of the loan.
34% Indians rely on friends for advice while taking loans followed by family at 31.8% and colleagues at 25.4%.
A financial advisor comes second
at 22.4% as the source of advice followed by sales representative of a loan
provider at 21.8%; 20.9% people take a self-decision while availing loan, and
do not consult anyone.
People in Mumbai and Delhi are
the most evolved in terms of consulting a financial advisor before taking at
loan at 44.2% and 38.8% respectively; For other cities it is the non-formal
sources for advice. The people of Nagpur are the most self-assured when it
comes to taking a loan and do not consult anyone, taking their own decision to
avail a loan at 50.8%. This is followed by people of Kolkata at 32.3% and
Ahmedabad (22.2%) respectively.
While the country is very
positive towards loans, a section of the respondents have also not been
positively drawn towards the concept of lending and borrowing and therefore
have never taken a loan before. The study identifies Key Behavioral Challenges that this
section faces. 35% of the respondents
say that “Having a loan is a stressful feeling”. The second reason for loan
aversion is that 32% of respondents ‘believe in saving and spending’. The fear
of not being able to repay is the third reason why people do not take loans,
said 32% respondents. The burden of documentation and hassle at 31% is another
reason why people do not prefer loans; so, they usually end up borrowing from
friends and family, said 28% of the respondents. In fact, among the least
important reasons for not taking a loan is that the employer provides with
advance salary, if needed (20%), the process is rigorous and time consuming
(25%) and the fear of repercussion in case of a default (26%). Another reason
cited for not taking a loan is the lack of awareness of different types of
However, what stands out as a
median reason for not taking a loan before, is that 28% of the respondents indicated
the take the loans from their friends and family. The study also shows that a
staggering 57.3% of respondents have never availed a loan before which means
that cash is still king, Three-fourth of the people are most comfortable in
using cash. This is followed by debit cards which are being used by 80% people,
half of them using them at least once a week or more. Only 26% people use
credit cards and 40% use net-banking, pointing that digitization of banking
services is the road ahead.
Home Credit has been working aggressively in India
and has been able to establish itself as a leading financial products and
services provider. Gathering intel with knowledge partners to have a deeper
understanding of the market trends, consumer behavior patterns is a continuous
process at Home Credit across each market. This enables a focused, targeted
customer centric proposition across all its product offerings. Almost 50% of Home
Credit’s customers are the First Time Borrower (FTB) who have no borrowing and
repayment history with credit rating agencies. The company has strong underwriting
capabilities, risk assessment, new market entry and customer focused approach
have ensured that the company has made the right disbursements of loans in a
responsible manner as well as has been able to advise and help customers plan
their finances better. All this has helped to build Home Credit as a lender of
choice and help the company retain its differentiated position in the market.
The company is committed to driving credit penetration and broadening financial
inclusion through responsible lending. This, the company aims to do through
offering financial solutions that are simple, transparent and accessible to
all, backed by trained financial advisers who are able to drive understanding
of credit, assess the borrower and help them to ascertain the right borrowing.
Supporting quote: Marko Carevic, Chief Marketing & Customer Experience Officer, Home Credit India: “We’ve made concerted efforts to broaden the ambit of financial inclusion across the world and India is a key market for us by virtue of the potential it offers. After China and Russia, India is now showing signs of a new resurgence and we have seen the evolution of the customers since our entry in 2012. The survey is yet another attempt to understand our customers so that we can customize our product offering to the need. We continue to build on the collective market intelligence coupled with our proprietary methods and technologies to evaluate all borrowers. As a company propagating responsible borrowing, we also effect responsible lending. We are committed to enhancing the quality of life through our financial products and services for our customers.”
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