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Home / News / India /  25% borrowers took personal loan to start their own business amid covid: Survey

Around 25% borrowers opted for a personal loan to start their own business, while 18% borrowers opted for a loan to manage their medical expenses and 17% borrowers opted for a loan to either buy a 2-wheeler or 4-wheeler, largely due to covid-19 pandemic and the resultant social and economic impact, according to a new survey on loan trends among young Indians conducted by IndiaLends, a new-age digital lending platform.

The Borrower Pulse Report by IndiaLends tries to understand borrower sentiments since the country went into lockdown a year ago.

Also Read | Six wrong calls on post-covid economy

Gaurav Chopra, founder and chief executive officer, IndiaLends said, “Covid-19 pandemic-induced financial constraints made the last 12 months one of the most challenging times of our lives. Economic downturn, coupled with job losses, dealt a big blow to many across the country. However, our survey suggests a strong sense of resilience among millennials deciding to take complete control of their financial future. The entrepreneurial spirit showcased by such a large percentage of our borrowers during the pandemic is a positive development. It is also heartening to see that the majority of loan applications came from tier-II cities, which clearly indicates that there is a huge pent-up demand in these under-tapped markets. Our study makes me optimistic about a faster post-pandemic economic turnaround."

"Interestingly, tier-II cities comprised 54% loan applications compared with 46% from tier-I cities. The tier-II cities with maximum loan applications were Coimbtore, Chandigarh, Lucknow, Indore and Kochi," he added.

The nationwide study was based on data collected from over 150,000 borrowers in the age group of 21-55 years, from tier-I and tier-II cities, during the period 25 March 2020 to 20 March 2021.

While Delhi NCR saw the maximum number of loan applications, there has also been a 38% increase in loan applications from tier-II cities. Due to a decline in luxury expenditure, loan applications from tier-I cities saw muted demand.

However, almost 52% borrowers in the study were in the age group of 25-35 years, making it a millennial-centric report. The report constituted both male and female borrowers, seeking loans ranging from Rs10,000 to Rs50 lakh"

Some other significant findings of the study are:

In Mumbai, 27% of the borrowers opted for a personal loan to start their own business, while 15% borrowers opted for a loan to purchase electronic gadgets such as laptops and tablets, given the shift to a remote working culture.

Delhi witnessed 31% loan applications for the purchase of household durables such as washing machines and dishwashers, while 25% applications were for medical expenses owing to the pandemic.

28% loan applications received in Bengaluru were for the purchase of electronic gadgets, followed by 12% applications for upskilling courses which points out to the fact that a lot of people utilized their free time to upskill or upgrade themselves

In Chennai, 19% loan applications were for purchasing two-wheelers or four-wheelers, while 17% borrowers opted for loans to purchase electronic gadgets such as smart TVs and laptops.

In Hyderabad, 20% borrowers opted for personal loans to cover their medical expenses, whereas 15% of applications undertook upskilling courses.

The survey also found that wedding and travel expenses saw a dip in percentage, thus confirming the fact that the younger population is now considering low-key weddings and budget-friendly travel options.

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