Consumer Durables and Business Loans Key Drivers of Credit Growth: How India Borrows Survey

• Consumer Durables and Business Loans continue to be the key reason for borrowing showcasing consumer confidence is high in Indian economy.

• 39% Indians would like a reputed organisation to educate them about finance related tasks over internet.

• About one-fourth Indians consider the loan offers received on WhatsApp as trustworthy.

• EMI cards continue to be the most preferred medium to take loans, accepted by 49% of the borrowers.

• Growing acceptance of digitalisation of financial services with 29% borrowers opting for online loans; 51% desire to shift to online channels for their next loan.

A study carried out by Home Credit India, a local arm of the leading global consumer finance provider, showed that the business-related borrowing increased in overall demand; up at 19% in 2023 from 14% in 2022. The study - How India Borrows Survey 2023 - further indicated that the trend in borrowing has shifted from running the household to purchasing consumer durables like smartphones and home appliances (44% in 2023).

How India Borrows 2023 Infographic

The study also highlighted the growing acceptance of digitalisation of financial services. Indian consumers have become comfortable with net banking, payment wallets and online shopping; and require limited guidance unlike in the past. 48% borrowers, prominent being Gen Z, shop online for personal needs, 44% rely on online banking for financial transactions, and 54% use mobile banking for day-to-day transactions. Only about 13% middle class Indians seek help for internet related tasks.

In line with the digital transition, WhatsApp has emerged as the new digital channel for loan, with 59% of borrowers having received loan messages on WhatsApp. However, only one-fourth borrowers consider loan offers received on WhatsApp as trustworthy, with Gen Z showing more trust towards this. As for loans initiated through tele calling, it increased from 16% in 2022 to 19% in 2023, while loans through POS/ bank branches saw a decline from 56% to 52%. More than half of the borrowers (51%) were looking forward to completing their entire future loan application on MobileApp without any physical interaction with POS/ Banks. The study revealed that the preference for online loan mediums is primarily driven by younger and aspirational small-town borrowers, with cities like, Dehradun at 61%, Ludhiana at 59%, Ahmedabad at 56%, and Chandigarh at 52%. In addition, 43% borrowers find chatbot service as easy to use, and is majorly led by Women and Gen Z.

Embedded finance has also gained traction in the recent years with 50% borrowers open to embrace the same during e-shopping. However, the uptake for the product among borrowers has come down by 10% from 2022 due to stringent RBI regulations on BNPL & PPI products leading to fewer offers. It is preferred as it makes borrowing faster and makes ecommerce shopping an easier process. EMI cards (49%) continue to be the most preferred medium for taking credit due to higher trust and faster disbursals.

In terms of digital literacy, urban and rural India are looking for financial lessons and management guidance more than ever now. 39% of borrowers said they would like a reputed organisation to educate them about finance related tasks over the internet, with Men and GenZ showing maximum interest. Smaller towns like Ludhiana (57%), Patna (55%) and Bhopal (48%) exhibited more enthusiasm about financial learning.

A major concern noticed among the borrowers was the use of personal information by loan companies. Almost 60% of the borrowers in India voiced out that they don't have any control on the data being shared by them, more so by borrowers from tier 1 towns. 58% of these worried borrowers also felt that the lending apps collect more data than required. Gen Z and borrowers from smaller towns showed higher concern with the amount of data being collected by lending apps. Among metros, 78% of borrowers from Chennai voiced their concern about the amount of data collected. The study further indicated that only 18% borrowers understand the data privacy rules, majority of them (88%) with just the superficial understanding on the subject, and 70% of the borrowers feel the need of transparent communication on the usage of personal data.

Speaking on the consumer study, Ashish Tiwari, Chief Marketing Officer, Home Credit India, said, "At Home Credit India, we are dedicated to fostering financial literacy and empowering individuals to make informed choices. The survey not only highlights the preferences of todays borrowers but also emphasises the need for greater awareness of data privacy. As we navigate in this digital era, Home Credit remains committed to providing trustworthy, transparent and accessible financial solutions, ensuring a responsible and inclusive financial future for all."

The HIB 2023 study was conducted across 17 cities including Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad, Lucknow, Jaipur, Bhopal, Patna, Ranchi, Chandigarh, Ludhiana, Kochi, and Dehradun. The sample size was approx. 1842 borrowers in the age group of 18-55 years, with an average income of Rs. 31,000 per month.

About Home Credit India
Home Credit India Finance Pvt. Ltd. is a local arm of the international consumer finance provider Home Credit International with operations spanning Europe and Asia and committed to drive financial inclusion in India. The company is committed to drive credit penetration and financial inclusion by offering wide financial solutions that are simple, transparent, and accessible to all. Home Credit India has an employee base of ~5000 and has been consistently expanding operations since its entry in 2012, with its operations spread over 625 cities across India. The company has a strong network of around 53,000 points-of-sale (PoS) and is growing with a customer base of more than 16 million customers, driven by Pan-India expansion across major markets, a range of diversified and innovative products backed by superior customer experience.