A new study by Home Credit India reveals that lower middle-class consumers in the country are increasingly interested in using ‘Credit on UPI’, which allows instant credit access through UPI-enabled apps.

The second edition of Home Credit India’s in-house annual consumer survey —‘The Great Indian Wallet Study: Consumer behaviour towards key financial aspects’ —showed that 42 per cent of such consumers, especially men, Gen Z and Tier 1 consumers, expressed interest towards using ‘Credit on UPI’.

Interestingly, the reasons to use ‘Credit on UPI’ include reduced timeframe in taking loans (53 per cent), ease of payments at retail stores (44 per cent), probability of getting better offers (23 per cent) and lesser charges (16 per cent).

As many as 24 per cent of consumers surveyed expect to use UPI Lite in future for small value transactions.

The Great Indian Wallet study was conducted across 17 cities including Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Pune, Lucknow, Jaipur, Bhopal, Patna, Ranchi, Chandigarh, Dehradun, Ludhiana and Kochi. 

The sample size was about 2500 in the age group of 18-55 years, with an annual income between ₹2-5 lakhs.

On average, the personal monthly income of lower-middle-class individuals is around ₹33,000, while monthly expenses stand at 19,000 in 2024. The growth in income over the past year has kept pace with the increase in expenses.

This study delved deep into the financial well-being index; income and expense trends; savings; and payment modes besidesUPI adoption. 

Speaking on the findings, Ashish Tiwari, Chief Marketing Officer, Home Credit India said: This year’s study reflects an upswing in the overall financial well-being among urban and semi-urban consumers due to the strong economic growth, providing a clear insight into consumer sentiments, spending patterns and saving habits among various demographics and segments.”

On ‘Credit on UPI’, Tiwari noted that some consumers wouldn’t prefer using such a facility as they feel the chances of falling into a debt trap are easier (31 per cent). The other factors that could hinder adoption are consumers being apprehensive about overspending (28 per cent), higher interest rates (24 per cent), higher processing and other charges (7 per cent).

Tiwari highlighted that 72 per cent of consumers are current users of UPI, with most usage seen among GenZ and Metro residents. However, as many as 64 per cent of those surveyed said they would stop using the UPI service if it becomes chargeable, he added.

Notably, UPI usage is the highest in Chennai (90 per cent) and lowest in Ahmedabad (58 per cent).

Financial Fraud

The Home Credit India study also highlighted that one-fifth of consumers (21 per cent) have been victims of financial fraud.

Cities such as Delhi, Kolkata, Hyderabad and Pune report a higher prevalence of financial fraud incidents. Men, Gen Z and consumers from the North recalled receiving frequent fraudulent calls and messages over the past months. 

Financial Well-Being Index 

As per the Great Indian Wallet study, the financial well- being index among urban and semi-urban consumers has increased over last year, both in terms of current status and future perception. Around 52 per cent of the consumers said that their income increased in the current year over last year, while 74 per cent of consumers expects their income to increase by the coming year. 

About two-thirds claim that they would be able to save more (66 per cent) and invest more (66 per cent) in the coming year. 

This buoyancy in consumer sentiment is fuelled by the upward growth trajectory in the economy, an increase in earning capacity, and a positive perception of income growth.