In India, obtaining a loan has become increasingly convenient, but for many borrowers, the aftermath can be significantly challenging. A recent internal survey conducted by Expert Panel, a fintech risk advisory and debt resolution platform, indicates a shift in the utilization of credit and the repercussions when repayments begin to falter.
According to the survey, nearly 39% of respondents reported receiving abusive recovery calls, while 28% mentioned receiving frequent calls from multiple lenders. Additionally, about 11% stated that recovery agents had visited their residences or workplaces, and 8% claimed to have faced threats of legal or police action.
The survey delves into the reasons behind repayment struggles. Income disruption emerged as the primary cause, with 31% citing job loss or salary reductions affecting their repayment capacity. Another 28% highlighted high EMI burdens relative to their income, and 19% mentioned managing multiple loans simultaneously. Factors like medical emergencies, family crises, and business-related losses also contributed to repayment stress, indicating a close link to financial vulnerability.
Furthermore, the survey revealed insights into the purposes of taking loans. Approximately 26% of borrowers sought loans for medical emergencies, while 22% borrowed for personal or family expenses, including education and weddings. Around 18% mentioned business requirements or income disruptions, with a smaller percentage utilizing credit for daily household needs or rolling over existing EMIs. Notably, only 9% stated that their loans were invested in asset creation such as housing or vehicles, signaling a shift towards consumption-driven borrowing.
The research findings highlight the challenges borrowers face upon delayed repayments, including persistent calls, contact from multiple lenders, and occasional visits by recovery agents. Despite the Reserve Bank of India’s guidelines on fair practices and warnings against harassment, complaints persist, emphasizing the need for responsible lending practices.
While official data shows stability in the financial system, early signs of stress are evident in borrower behavior, such as missed repayments and escalating EMI burdens. The increasing reliance on unsecured retail lending, especially in personal loans and credit cards, has prompted regulatory adjustments to mitigate risks. The survey underscores the evolving landscape of borrowing trends towards immediate needs over long-term asset creation, with repayment stress intensifying among financially constrained individuals.
As recovery efforts become more assertive, borrowers with limited financial reserves are facing heightened pressure. These developments align with the RBI’s concerns regarding escalating unsecured lending and growing household debt, indicating a noteworthy shift in borrowing patterns and repayment dynamics.