Significant percentage of borrowers prefer securing loan online: Survey

Significant percentage of borrowers prefer securing loan online: Survey
Share This :

A significant percentage of borrowers led by millennials, prefer online mode to secure rather than traditional offline channels, indicating an increase in digital penetration during the COVID-19 period, says a survey.

Post the second wave of COVID-19 pandemic, shows a largely positive consumer borrowing trend and thereby, reflects a return to normalcy as consumer sentiments are positive and buoyant about economic revival, according to an annual survey ‘How India Borrows’ (HIB) conducted by financial firm Home Credit India.

Nearly 40 per cent borrowers showed willingness to move to digital platforms for taking This is over and above the 15 per cent customers who have already graduated to the online loan journey instead of traditional offline channels.

Although technology has been a key enabler, the survey findings reveal that like all digital trends, chatbot familiarity and trust on it are governed by age younger customers leading it.

The HIB study was conducted across 9 cities that includes Delhi, Jaipur, Bangalore, Hyderabad, Bhopal, Mumbai, Kolkata, Patna, Ranchi. The primary sample size was over 1,200 respondents (Home Credit customers) in the age group of 21-45 years, with an income of less than Rs 30,000 per month.

There has been a sharp drop in borrowing for running household expenses to 4 per cent in 2021 viz–viz 85 per cent last year, thereby showing a transition from need-based borrowing to desire-based borrowing due to revival of the economy, the survey report said.

There has been noticeable uptick in borrowing for business set-up or expansion accounting for 28 per cent, followed by small or credit for consumer durables purchase at 26 per cent of the total borrowings, it said.

Other positive reasons were house renovation/new construction (13 per cent), medical emergency (2 per cent), vehicle loan (9 per cent), marriage (3 per cent), education loan (2 per cent), investments and returning a previous loan etc (1 per cent).

The survey identified an increase of over 50 per cent in borrowings viz-a-viz 2020, however, borrowings for running household declined, it said.

The pandemic has also led to the acceleration of digitalisation as rising number of borrowers are showing preference for adopting online loan journey for future borrowings, hence strengthening digital empowerment in financial services, although financial literacy penetration is still a work in progress, Home Credit India, Chief Marketing Officer, Vivek Kumar Sinha said.

With many people having suffered job loss, salary reductions, it has led to an increase in consumer need towards business revival this year.

Regionally, the survey findings outline that Bengaluru and Hyderabad recovered faster from the pandemic, with 41 per cent of respondents in Hyderabad taking loans for business revival and 42 per cent respondents in Bengaluru for consumer durables purchases.

While states like Bihar and Jharkhand have the lowest Internet population at 24 per cent and 29 per cent respectively, digital literacy in terms of using mobile phones in Patna and Ranchi was recorded at 64 per cent and 65 per cent respectively, it said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

, Significant percentage of borrowers prefer securing loan online: Survey, Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Source link

Share This :