Remember the days of the COVID-19 pandemic when uncertainty ruled, and people stuck to their savings for financial security?
Fast forward to today; loans take preference over savings, contended by most of the Indian populace. But why the sudden change? The ways of managing finance have transformed in accordance with the recovery of the economy, rising aspirations, and availability of easy credit.
According to government data, the net financial savings of Indian households dropped to Rs 14.16 lakh crore in 2022-23, about 5.3 per cent of GDP compared to 7.2 per cent in the previous year.
The pandemic required individuals to keep discretionary expenditures and build savings. Post-COVID, however, all that changed.
Pre-COVID (2020-2021): People saved for emergencies, cut back on unnecessary spending, and hesitated to take loans.
Post-COVID (2023-2024): Loan applications increased, especially for discretionary spending such as travel, electronics, and home renovations. Small-ticket loans also became more common after the pandemic.
Fintech innovations have made getting a loan faster and more convenient than ever. Instant loans through digital lending platforms with very little documentation have made borrowing more attractive than saving.
Many financial institutions and fintech companies offer competitive interest rates and attractive EMI options. The affordability of monthly EMIs encourages people to opt for loans rather than wait and save up for big expenses.
People increasingly want a higher standard of living. Whether it is a high-end gadget, a car, or international travel, many have begun financing their goals through easy loans instead of waiting to save.
Increased living costs do not allow many people to save easily, so instead of waiting for years to accumulate enough money, they prefer borrowing to meet their needs now.
Entrepreneurs and small businesses have become more dependent on loans than personal savings to expand their businesses and maintain cash flow while leveraging credit to boost growth.
There has been a change in financial attitude in India from a savings mentality to a loan economy. Loans give people the power to meet goals faster, but responsible borrowing is what ensures financial well-being.
WeCredit positions itself as a guide for finding loan solutions and balancing debt with savings so people can make wiser financial decisions.