Equated monthly installment (EMI) cards are a popular medium of credit, with it being preferred by 49% of borrowers, a survey by Home Credit India showed. The survey was conducted across 17 cities, including Mumbai, Kolkata, Chennai, Pune, Hyderabad, and Delhi – National Capital Region.
The ‘How India Borrows’ survey noted that since 2021, the trend in borrowing has shifted to purchasing consumer durables like smartphones and home appliances from running the household.
Around 44% of these borrowers rely on online banking for financial transactions. More than 54% use mobile banking for day-to-day financial updates.
According to the survey, over one-fourth of borrowers opted for the online channel for availing loans. Loans initiated through telecalling rose to 19% in 2023 from 16% in 2022, while loans through point of sale and bank branches fell to 51% from 56%.
In line with the digital transition, more than 51% of borrowers are looking to complete their entire loan application process on the mobile phone application without any physical interaction with a bank or a point of sale machine.
The survey noted the preference for online loan mediums is driven by younger and aspirational small time borrowers, especially in cities like Dehradun, Ludhiana, Ahmedabad, and Chandigarh.
While embedded finance has gained traction in recent years, the uptake for the product decreased 10% in 2023 as RBI tightened norms on buy-now pay-later and prepaid payment instruments.
On the other hand, the survey underlines a key concern among borrowers regarding the use of personal data by loan companies. Only 18% of borrowers understand data privacy rules, with a majority of the having a mere superficial understanding of the subject. Less than 23% of borrowers are aware of the usage of personal data by loan applications.