How India Borrows: A Shift Towards Aspirations and Digital Finance

Home Credit India's latest study reveals a shift in borrowing patterns among India's lower-middle class, moving from survival-driven to aspiration-driven loans. The study highlights increased borrowing for consumer durables, small businesses, and a growing preference for digital banking platforms, reflecting India's evolving socio-economic landscape.

In a revealing report by Home Credit India, the borrowing habits of India's lower-middle-class consumers show a notable transformation. The 'How India Borrows 2024' study outlines a shift from borrowing driven by necessity to loans inspired by aspirations and entrepreneurship, thanks to greater access to credit and digital innovations.

The report highlights an increase in borrowing for consumer goods and small enterprises, indicating an evolving economic outlook fueled by structural changes and government support. Borrowing for business expansion surged to 21% in 2024, as individuals sought new income avenues amidst pandemic-induced economic shifts.

The study also underscores digital finance's rise, with 65% of users favoring app-based banking in 2024. The report advocates for improved data privacy awareness and increased financial literacy to align with the shift toward digital financial solutions.

(With inputs from agencies.)