For most salaried individuals, a delay in salary can have several consequences on one’s monthly household budget. From meeting any unseen expenditure at home to paying the EMIs of the loan, a delay in monthly salary over a few months can derail the finances off the track. A new-age digital debt-collection platform CreditMate, in a recent survey conducted across all states, has found that the current economic slowdown is affecting debt recovery across the country.
The ‘India Delinquency Report’ which is based on data collected from 2 lakh borrowers has found that delay in salaries and business downturn were the two main reasons for debt defaults. The report cites that 36 per cent of the defaults was because of delay in salaries, 29 per cent were due to business downturn, while 13 per cent were due to medical emergency and 12 per cent due to loss of job.
Apart from debt default, the CreditMate survey also included other parameters such as the demographics of the debtors and borrowers, types of loans and sector-wise debtors, demand and payment patterns among male and female borrowers, transaction patterns, most-preferred modes of collection, and behavioural patterns of the defaulters. The loan categories comprised two-wheeler loans, personal loans, SME loans, student loans, medical loans and digital loans.
The study also revealed interesting facts about debt repayment. For example, male borrowers accounted for the maximum late payments at 82 per cent, followed by their female counterparts at 18 per cent.
The young and tech-savvy generation comprising both salaried and professionals was comfortable with online payments as opposed to cash payments. About 79 per cent of the respondents used online modes of payments, while 21 per cent of defaulters made cash transactions. According to the survey, just under 40 per cent used debit cards to make payments, followed by e-wallets. One in five payment transactions were done via UPI.
In terms of the geography of borrowers and debtors, Goa topped the states for the best payment rate, while Arunachal Pradesh, Haryana and Delhi were the worst performers. Among the cities, Vadodara, Mumbai and Patna were the top performers, while Ludhiana, Chennai and Bhopal accounted for the worst payments.
It is important to keep paying the EMI’s on or before the due date. Timely repayments ensure that there is no penalty levied thus keeping the cost of the loan under control. Most importantly, defaults impact one’s credit profile and dampen the chances of any future loan requirements. Late payments may impact one’s CIBIL score as well. Banks and other lending institutions prefer borrowers who have a better credit profile and high credit score.