personal finance

Personal loans buck slowdown trend says Economic Survey 2019-20


The Economic Survey 2019-20 says that moderation in credit growth was witnessed across all the major segments of non-food credit, except personal loans, which continued to grow at a steady and robust pace during 2019-20 for the data available till November 2019. While credit to industry and service sector shows a declining trend, the credit growth to personal loans remains similar.

The Survey has said that despite a decrease in policy rates by the Reserve Bank of India , the credit growth in the economy has been declining since the beginning of this year. The bank credit growth (YoY) moderated from 12.9 per cent in April 2019 to 7.1 per cent as on December 20, 2019.

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The moderation was led by a sharp deceleration in credit growth to the services sector. Credit growth to industry has been very low in the recent months. The main contributor to this slowdown has been a negative growth of credit to Micro, Small and Medium Enterprises and Textiles.

The recent surveys done by the various FinTech companies have also suggested that equated monthly instalment (EMI) based financing to buy consumer durables has grown. According to recently released report by CASHe, a digital lending company, in 2019 millennials borrowed the most for medical expenses and to purchase consumer durables. According to the report, emergencies, like unforeseen medical expenses, is the reason why 37% of millennial customers resorted to borrowing – a sharp increase from 31% last year. The other reasons for taking loans were loan foreclosure and holidays, the report stated. While ’emergencies’ accounted for approximately 57% of the borrowing, ‘aspirations’ accounted for 43%, said the CASHe survey report.





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