Only 52 percent of the borrowers in India understand what a CIBIL score is and its importance, according to research conducted by Home Credit India, a local arm of the international consumer finance provider with operations spanning across Europe and Asia.
The research was done across 7 cities to understand the levels of financial literacy amongst the borrowers. Close to 1,000 respondents were interviewed in the survey.
According to the survey, 68 percent of the respondents did not know their CIBIL score. The numbers were lowest than the country average in Patna with only 22 percent of borrowers aware of their CIBIL score, followed by Kolkata (25 percent) and Mumbai (25 percent), the research said.
The research also revealed that 76 percent of the borrowers did not know the interest amount on their loans. They are only interested to know the EMI amount to be budgeted monthly but were found to be unaware of the interest amount separately.
Only 17 percent of borrowers in Delhi, 19 percent in Jaipur and 24 percent in Mumbai knew the interest amount on their loans, on asking.
About the calculations of interest, as many as 43 percent across the 7 cities said that they only had partial knowledge of how their interest on the loan was calculated. The respondents were concerned and kept track of their EMI amount while the knowledge of the rate of interest charged and amount of interest was low.
Speaking about the research, Marko Carevic, Chief Marketing and Customer Experience Officer said, “Financial Literacy is imperative for any country’s economic progress. The research revealed that a majority wants to understand their finances better and are keen to take financial literacy lessons.”
Research also revealed that 50 percent of the respondents were found aware of mutual funds. 66 percent of people of Kolkata are aware of mutual funds followed by 61 percent in Delhi, 53 percent in Mumbai, 50 percent in Patna, 43 percent in Bhopal, 41 percent in Hyderabad, and only 37 percent in Jaipur.
A whopping 95 percent of the borrowers said that they fully understood their bank passbook and it’s elements. Bhopal leads this trend with 98 percent, followed by Jaipur (97 percent) and Delhi (96 percent).
As per the survey, 74 percent of the respondents would like to receive financial literacy lessons to be able to manage their finances better. Interestingly, only 44 percent of respondents understand the difference between credit and debit cards.
Given the frequent visits to the bank branch, using passbooks 87 percent know the meaning of savings account and 80 percent understand the meaning of the current account. The women interviewed in the research were found to have a lower understanding of finances as compared to men.