Money & Banking

Online, personal loans light up Diwali shopping

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

There is a 25 per cent increase in the demand for loans during the festival season compared to the 3-5 per cent month-on-month growth in normal times   -  istock/relif

 

With the economy in a slowdown mode and consumers facing a cash crunch at the month end, small ticket personal loans seem to be fuelling shopping this festival season.

Apart from buying white goods, people are taking loans for even home furnishings and family trips, according to data with online fintech companies and non-banking financial companies. Four-wheeler purchases continue to be subdued, but two-wheeler buying seems to have picked up between Dussehra and Diwali.

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

Also read: Diwali shopping: The spark is missing in Gujarat

Bridge loans are sought-after at month-end when people often run out of cash, say players, adding that there has been an upswing in this credit mode with two festivals — Dussehra and Diwali — happening in the same month, and with the wedding season about to start.

“In the festival season, people require money for a family trip, 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 ₹1 lakh and people generally draw in multiples of ₹30,000-₹35,000 on an average,” said Anuj Kacker, Co-founder and COO, MoneyTap.

According to a survey by online and paperless personal loan provider MoneyView, consumers have been taking loans anywhere between ₹10,000 and ₹5 lakh for purchases and even for business expenses.

“We see more of young users (between 20 and 30 years) coming from Tier-3 cities and middle-aged users (30 -50 years) coming predominantly from Tier-I cities,” it said.

According to Satyam Kumar, CEO and co-founder of digital lending start-up LoanTap, there is a 25 per cent increase in the demand for loans during the festival season compared to the 3-5 per cent month-on-month growth in normal times. “We see an average loan requirement of between ₹1lakh and 1.5 lakh for home furnishings, house painting and renovation, consumer goods, high-end electronics and holidays,” he said.

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

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Published on October 23, 2019
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