Indians saving more, repaying debt due to covid-193 min read . Updated: 11 Jun 2020, 02:03 PM IST
- Indians are worrying about their financial future and focusing more on saving due to covid-19 pandemic, say reports
The covid-19 pandemic and its economic impact have taken a toll on businesses, jobs and incomes, forcing many to reconsider their financial situation and priorities. This change is also reflected in the way people save and borrow. Two surveys, by BankBazaar and IndiaLends, showed that Indians are worrying about their financial future, focusing more on saving and turning to digital lending in the wake of the pandemic.
BankBazaar surveyed 1,112 customers on the impact of covid-19 on their personal finance management, and published the results in a report called MoneyMood Covid Edition.
The survey, released on 9 June, showed that people have become more conservative when it comes to their financial priorities, with discretionary spending falling, and saving, investing and loan repayment rising to the top of the list.
When asked what their topmost financial priority would be after the pandemic, 52% said saving, investment and debt payment; 24% said household expenses, utilities and education; and 13% said healthcare and insurance. In contrast, only 11% responded, saying personal spending, recreation and entertainment would be their priority.
“The economic costs of the lockdown have been significant. The disruption to the supply side has transformed into a collapse of demand. Coupled with job losses and furloughs at unprecedented levels, people have become more careful about spending. Now that things are slowly limping back to normal, and economic activities are picking up, there is expected to be an uptick in consumption of goods and services. However, there is a change in consumer behaviour. Impulse purchases are falling, discretionary spending is low, and people are trying to save more to tide over the uncertainties," said Adhil Shetty, CEO, BankBazaar.
According to the report, even when the economy begins recovery, spending patterns may no longer be the same as before, primarily due to the impact of social distancing.
Making ends meet
A survey by IndiaLends, released at the beginning of the month, corroborated BankBazaar’s findings. It showed that 82% Indians are bearing the financial brunt of covid-19.
According to the survey, which had more than 5,000 respondents, 94% of the respondents said they would have to be extra careful about how they spend their money in the next few months; 84% said they were cutting back on spending; and 90% expressed concern about their savings and financial future.
“The financial fallout from the covid-19 pandemic has resulted in far-reaching consequences for many. Our survey shows, in spite of reducing their expenses, a staggering 82% of respondents foresee problems in making ends meet. To tide over this crisis, they are seen to be actively looking for personal loans, even as they repay existing debt. With the lockdown coming to an end and the virus set to be part of our lives, it is imperative for individuals to take stock of their financial situation and plan for the times ahead," said Gaurav Chopra, CEO and founder, IndiaLends.
According to the IndiaLends survey, 72% respondents were planning to opt for personal loans to take care of the cash crunch arising from the pandemic. But covid-19 may have changed the way people borrow too.
Digital and contactless transactions have taken centre stage since the outbreak of the pandemic, and getting credit is no exception to this.
The BankBazaar survey found that 71% of people would prefer to opt for digital credit in the wake of the pandemic, mainly due to convenience and social distancing norms. However, 29% of respondents said they would prefer a face-to-face interaction or conversation with a bank representative before opting for credit.
While the pandemic has reshaped the way we organize our finances, most services are evolving to meet the emerging needs of customers.
The financial fallout of covid-19 is likely to last for some time, so changing our spending, saving and investing habits to adapt to the post-covid world seems unavoidable.