Forty-six percent of Indians borrowed to run their households in COVID times, reveal Home Credit India research. One out of every four people borrowed money from their friends/family during the lockdown largely to manage their daily household needs.
Forty-six percent of people borrowed money to make ends meet followed by 27 percent for paying their EMIs and 14 percent suffered job losses in 2020. Mumbai and Bhopal lead with the highest number of people (27 percent) borrowing money followed by Delhi (26 percent) and Patna (25 percent).
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In 2019 too, 46 percent of people borrowed but that not under any duress, and only to fulfill the needs of the family, followed by 33 percent who did so for upgrading lifestyle.
The ongoing pandemic has had a drastic impact on the economy and people across the strata of society. With job losses and pay cuts across industries, the lower-middle-income group has been affected severely. The pandemic has led to a shift in perspective towards loans and borrowing preferences.
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Home Credit India, a local arm of the international consumer finance provider with operations spanning over Europe and Asia, conducted research across 7 cities, to understand the borrowing patterns of people during the Covid lockdown.
The impact of the pandemic is still unfolding, and people have gone through an extremely difficult time. Pixabay
The research revealed that 46 percent of respondents borrowed money primarily to run their households. The impact of the pay cuts/delays was the next big reason why most borrowers resorted to borrowing, 27 percent of respondents cited repayment of their monthly installments from the earlier loan as the second biggest reason behind borrowing. 14 percent of the respondents borrowed as they suffered job losses.
Want to read more in Hindi? Checkout: हमारा लक्ष्य भारत को विज्ञान एवं तकनीकी हब बनाना : डॉ. निशंक
Another insight of the research reveals, unlike normal times, during Covid, people preferred to borrow money from their friends and families as it gave them the flexibility to return the money when the situation normalized/jobs and salaries were restored. The research also showed that 50 percent of the respondents admitted to returning the borrowed sum once the situation normalized/they returned to their jobs. 13 percent of the people said they will look at returning the sum after paying their loan amounts.
Speaking about the research, Marko Carevic, Chief Marketing, and Customer Experience Officer said: "We undertake research every year to understand our customers and their preferences better. The impact of the pandemic is still unfolding, and people have gone through an extremely difficult time.
"Our research on the borrowing patterns of India has revealed some interesting new trends which contrast with the trends of the pre-COVID times. The lockdown time has seen borrowing happening from family and friends due to the flexibility in returning the amount as the pandemic has set a lot of uncertainty in the lives of people. Incomes are scrunched making people borrow money to run their households." (IANS)