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Indians Took More Loans For Cars, Houses, But Not For Education Through COVID: RBI Data
India, 8 July 2021 3:15 PM GMT | Updated 8 July 2021 3:17 PM GMT
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Overall loans lent by banks declined during the second wave of the pandemic. However, personal loans rose at an average of 12 per cent in the second wave.
Data released by the Reserve Bank of India (RBI) shows that Indians continued to take loans to buy houses and vehicles and collated gold to borrow funds for use amid the pandemic. In contrast, there was a fall in loans to fund education. The bank's credit data shows that personal loans rose at an average of 12 per cent in the second wave (March to May), which was previously at 11 percent from April to September 2020 (first wave). The bank is hopeful that the relief measures it announced, steps were taken by the government, and the increased vaccination rates will lead the country to economic recovery.
This report comes at a time when interest rates for home loans and education are down by 1 per cent and for vehicles are less by 50 to 70 basis points since March 2020. Farheen Nahar, a psychology student from Kolkata, told The Logical Indian that her family has just moved into a new house but is reluctant to take any loan for her education. "Education is one of the most basic needs. My parents cannot take the responsibility of another loan because they have to pay EMI for the new house. It's a sad situation for me," she added.
Increased Demand For Personal Loans
Housing loans, vehicle loans, education loans, outstanding credit card bills and borrowing on gold deposits all come under the umbrella term 'personal loans'. After a gap of eight months, housing loans reached an improvement of double digits, and vehicle loans showed a sharp back-bounce. Other personal loans, in which banks require no collateral, have also increased. According to the data, education loan was the only category that saw a consistent decline in the first and the second wave. The majority of education loans cater to the type of students who want to fund their education abroad. Since that came to a standstill, demand for loans also declined. Moreover, students took to social media to ask for help via crowd-funding.
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