Roughly one in four families borrowed money to keep their households running during the pandemic, according to a survey by Home Credit India Finance.
The surveyed covered 1000 respondents across seven cities of the country to study the borrowing patterns of the Indian households impacted by pay cut and pay delays.
It revealed that 46 percent of respondents borrowed money from their friends or family primarily to run their households. Moreover, the decision to borrow the money was led by men in 23 percent of households, while the women insisted on either not borrowing or borrowing from financial institutions.
Friends or family were preferred lenders because of the flexibility of repayment involved.
“The impact of the pay cuts/delays was the next big reason why most borrowers resorted to borrowing. 27 percent of the 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,” it said.
The same research conducted in August 2019 cited different reasons for borrowing.
According to the research in 2019, “Among the primary reasons for borrowing money, fulfilling family’s needs topped with 46 percent of the respondents followed by the desire to upgrade their lifestyle which was at 33 percent. Lifestyle upgrades were quoted as an updated smartphone/TV/refrigerator or vehicle.”
“The research also showed that 50 percent of the respondents said they returned the borrowed sum once the situation normalised/they returned to their jobs. 13 percent of the people said they would look at returning the sum after paying their loan amounts,” it added.
This pattern was observed the highest in Mumbai and Bhopal at 27 percent, followed by Delhi and Patna at 26 and 25 percent respectively.
Mark Carevic, Chief Marketing and Customer Experience Officer of Home Credit India, said: “We conduct 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.”