Over 50 per cent of borrowers prefer equated monthly instalment (EMI) cards for shopping or borrowing money, and more than three-fourths of such debtors were from Tier 1 and Tier 2 cities, according to the How India Borrows (HIB) 2022 study.
Gen Z and millennials are optimistic about digital lending services, owing to their convenience, the study of Home Credit India, the local arm of Home Credit, a leading finance provider.
Ashish Tiwari, the chief marketing officer of Home Credit India, said, “The big takeaway of this year’s study is the digital evolution of consumer credit in India, driven by Gen Z and millennials from Tier 1 & 2 cities. The borrowing trends point to the emergence of embedded finance phenomena leading to the popularity of EMI financing. The new-age consumers are now not averse to going for loans or credit, especially small-ticket size to fulfill aspirations."
The survey was conducted across Delhi-NCR, Mumbai, Kolkata, Bengaluru, Hyderabad, Bhopal, Patna, Ranchi, Ahmedabad, Chandigarh, Chennai, Dehradun, Jaipur, Lucknow, Ludhiana, and Pune. The sample size was around 1,500 borrowers in the age group of 18-55 years, with an average income of Rs 30,000 per month.
The study further shows that the borrowing trend continues to grow strong irrespective of the macroeconomic headwinds, with 75 per cent of borrowers taking loans for consumer durables, home appliances, home renovation, and business.
"Owing to buoyant sentiments, more than 50 per cent of borrowers showed a preference for EMI cards when it came to shopping or taking credit, followed by credit cards (25 per cent), with new-age lending platforms, including ‘Buy Now, Pay Later’ evidently losing out with less than 10 per cent in favour," said the report.
Moreover, 60 per cent of borrowers, primarily Millennials and Gen Z from Tier 1 and Tier 2 cities (led by Bengaluru at 82 per cent, Patna at 74 per cent, Lucknow at 69 per cent, Ludhiana at 68 per cent, and Jaipur at 68 per cent) have shown interest in ‘embedded finance’, where e-commerce shopping can be converted to EMIs for affordable financing. Most of them believe embedded finance makes borrowing faster and e-commerce shopping easier
