Money & Banking

Personal loan disbursal ticks up as consumers go on a Diwali shopping spree

Surabhi Mumbai | Updated on October 23, 2019 Published on October 23, 2019

With the economy in a slowdown mode and many consumers facing a cash crunch at the month-end, small ticket personal loans seem to be fuelling a lot of shopping this festive season. Apart from buying white goods, people are even taking loans for home furnishings and family trips, data with such online players reveal.

Online fintech companies and non-banking financial companies say they have seen an uptick in credit demand over the last few months.

“The demand for short-term loans is seen to be growing across geographies -- be it Tier-I cities or smaller towns. The festive season in India starts from September up to the New Year; we have observed a 50 per cent to 75 per cent increase in applications already. Small ticket size, instant loans help people in financing their planned as well as impulse purchases,” said Jitin Bhasin, Managing Director, RupeeRedee and FincFriends, adding that Internet savvy consumers, especially millennials are comfortable availing of such flexible and transparent products.

Bridge loans are especially common during the month-end, when people often require some extra cash, say players, adding that with two festivals – Dussehra and Diwali – in the same month and the wedding season about to start, the requirement for credit has seen an upswing.

“In the festive season, people often require money for a trip with the family, to paint the house or buy consumer durables or gifts. For MoneyTap, there has definitely been an increase in the line of credit taken by our customers. The average credit line size is about Rs 1 lakh and people generally draw out in multiples of Rs 30,000 to Rs 35,000 on an average,” said Anuj Kacker, Co- founder and COO, MoneyTap.

A recent survey by the online and paperless personal loan provider, MoneyView, revealed that consumers have been taking loans of anywhere between Rs 10,000 to Rs 5 lakh for purchases such as home furnishings, apart from business expenses.

“We see more younger users coming (between 20 years and 30 years) coming from Tier-3 cities and middle-age users (30 years to 50 years) coming predominantly from Tier-I cities,” the MoneyView survey noted.

This comes at a time when many NBFCs have been facing liquidity troubles and are facing challenges in funding loan requirements.

Reserve Bank of India data reveals that personal loans from banks have also increased by 17 per cent in July this year, compared with 16.7 per cent in July last year. Overall, bank credit and deposits grew at 10.26 per cent and 10.02 per cent to Rs 97.01 lakh crore and Rs 127.22 lakh crore, respectively, in the fortnight ended September 13.

Banks have also been trying to cash in on the demand for retail credit. Private sector HDFC Bank has launched the Festive Treats discount offer, taking on online e-commerce players. Similarly, Federal Bank is offering lucrative debit card and debit card EMI offers for the retail customers.

Published on October 23, 2019
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