While women are perceived to have made impressive strides to become financially independent, the survey reveals that only 10 per cent of borrowers are female, suggesting that Indian women, continue to remain conservative with borrowing decisions.
CASHe, the digital lending company for young salaried professionals, has released ‘The 2020 Millennial Loan-o-Nomics’ report on the millennials’ key borrowing and spending habits. Various findings of the markets and consumer behaviour have been revealed by the report, such as loan demand for Rs 10,000-50,000 value category topped the borrowing chart (60 per cent in 2020 compared to 43 per cent in 2019).
According to the report, emergency fund requirements during COVID-19 like Medical Expenses and Credit Refinancing topped the chart for reasons why millennial availed digital loans in 2020. A surge was also seen in loan demand for home renovation and shopping post the lockdown. Compared to the trend in 2019, borrowing by the millennials was skewed towards the purchase of consumer durables. The 2020 report analyzed data of an active pool of over 400,000 loan applications received from customers outlining multiple data points and key insights showcasing the typical consumption patterns, buying behaviour and borrowing habits of millennials across India.
The Covid-19 pandemic has led to a massive push to the digital lending ecosystem with the rise in the number of digital lending apps. Yogi Sadana, CEO of CASHe, says “The findings are based on young population with financial aptitude much ahead of its previous generations. Most millennials prefer to move out of their parent’s place thus embarking on a journey of financial independence.” He further adds, “With the pandemic creating a heavy impact on the Indian job situation, is thus the reason why 16 per cent of millennials availed loans for credit refinancing in 2020 which was not a borrowing pattern seen in 2019. Averse to the manner in which millennials are perceived, the data from the report clearly outlines the purpose of borrowing among this category being need-oriented rather than redundant.”
Having said that, while women are perceived to have made impressive strides to become financially independent, the survey reveals that only 10 per cent of borrowers are female, suggesting that Indian women, continue to remain conservative with borrowing decisions.
Bengaluru soars ahead in terms of millennial credit demand followed by Hyderabad, Chennai, Mumbai, Pune, Gurugram and Kolkata. Older millennials, between the ages of 30-40 accounted for about 51 per cent of the loans taken, whereas the millennial cohort earning in the 10,000-25,000 category presented the highest number of borrowers at 41 per cent, as compared to the 25,000-50,000 category that borrowed the most in 2019.
The report also stated that the average frequency of repeat loans in 2020 was 147 days, compared to 71 days in 2019 and 66 per cent of the applicants were repeat users in 2020. Loan demand was highest with 81 per cent from millennials earning between Rs 10,000 – Rs 50, 000. In terms of loan size, most millennials (76 per cent) preferred small-ticket loans ranging between Rs 10,000 – Rs 50, 000. Sadana says, “This reinforces the idea that millennials are actually quite financially disciplined – repaying loans on time and dispelling their image of being irresponsible spendthrifts.”
Sadana, says “The pandemic has created a spurt in digital payments and digital lending in India that are seeking to address the unmet credit needs of young salaried millennials and underbanked individuals. Being the country with the highest youth population, it is integral to understand the sentiments of the millennials and help them meet their aspirations. This data allows us to understand their spending and borrowing behaviour while reflecting on where they are currently in their lives — settling down, renting out, new job, starting families’ etc.”
The customer analysis also shows certain fascinating, novel insights. Despite the differences between the spending habits of Gen X and millennials, some things remain constant. What drives the spending habit of most people in our country is the annual/calendar sale offered by most of the leading e-commerce portals. Therefore Valentine’s Day, Republic Day, and Diwali ranked among the top occasions when millennial availed digital loans.
Sadana adds, “Lockdown restrictions have led to the complete digitization of loan disbursal and repayment processes resulting in approving a loan application in 5-10 minutes. With a large population falling under the young salaried millennials category, legitimate digital lenders are now tying up with leading banks to not only make credit accessible but also cater to their unmet demands.”