MUMBAI: Nearly three-quarters of borrowers who took out personal loans during the lockdown months did so to make ends meet or to pay their EMIs on time. In addition, one in four borrowers took money from family and friends to meet their household needs.
Home Credit India, a local branch of the international consumer finance company with offices in Europe and Asia, has conducted research in 7 cities to understand people’s borrowing patterns during the Covid lockdown. The responses showed that 46% of people borrowed money to make ends meet, followed by 27% to pay for their EMIs, and 14% suffered job losses in 2020. By comparison, personal loans for consumer durables or two-wheelers and other personal expenses were increased in the first five months of FY20.
The fact that people took out loans to pay EMIs even though the Reserve Bank of India approved a moratorium on loan repayment through August shows that borrowers were very aware of their creditworthiness. The reason they borrowed from friends and family was to borrow money from their friends and families because it gave them the flexibility to return the money when the situation normalized or jobs and salaries were restored. The research also showed that 50% of respondents admitted that they would return the amount borrowed once the situation normalized. 13% of people said that after paying their loan amounts, they will try to repay the amount.
In India, the survey was conducted in seven cities with nearly a thousand respondents. The cities were: Delhi, Mumbai, Kolkata, Hyderabad, Patna, Bhopal and Jaipur.
Borrowing from friends and family was highest in Mumbai and Bhopal at 27% each, followed by Delhi at 26% and Patna at 25%. The research also found that the decision to borrow money from family and friends was made by male members of the households, with 23%. The women interviewed in the study showed a preference over family and friends for either not taking out loans or taking out loans from financial institutions.
“Our research into India’s credit patterns has revealed some interesting new trends that contrast with the trends of the pre-Covid era. Loans were taken out from family and friends during the lockdown period as the repayment of the amount is flexible as the pandemic has made people’s lives highly insecure. Income will be squeezed, allowing people to borrow money to run their household, said Marko Carevic, chief marketing and customer experience officer at Home Credit.
Home Credit India, a local branch of the international consumer finance company with offices in Europe and Asia, has conducted research in 7 cities to understand people’s borrowing patterns during the Covid lockdown. The responses showed that 46% of people borrowed money to make ends meet, followed by 27% to pay for their EMIs, and 14% suffered job losses in 2020. By comparison, personal loans for consumer durables or two-wheelers and other personal expenses were increased in the first five months of FY20.
The fact that people took out loans to pay EMIs even though the Reserve Bank of India approved a moratorium on loan repayment through August shows that borrowers were very aware of their creditworthiness. The reason they borrowed from friends and family was to borrow money from their friends and families because it gave them the flexibility to return the money when the situation normalized or jobs and salaries were restored. The research also showed that 50% of respondents admitted that they would return the amount borrowed once the situation normalized. 13% of people said that after paying their loan amounts, they will try to repay the amount.
In India, the survey was conducted in seven cities with nearly a thousand respondents. The cities were: Delhi, Mumbai, Kolkata, Hyderabad, Patna, Bhopal and Jaipur.
Borrowing from friends and family was highest in Mumbai and Bhopal at 27% each, followed by Delhi at 26% and Patna at 25%. The research also found that the decision to borrow money from family and friends was made by male members of the households, with 23%. The women interviewed in the study showed a preference over family and friends for either not taking out loans or taking out loans from financial institutions.
“Our research into India’s credit patterns has revealed some interesting new trends that contrast with the trends of the pre-Covid era. Loans were taken out from family and friends during the lockdown period as the repayment of the amount is flexible as the pandemic has made people’s lives highly insecure. Income will be squeezed, allowing people to borrow money to run their household, said Marko Carevic, chief marketing and customer experience officer at Home Credit.
