India’s millennials – what a shock – are borrowing for consumables.
This is a massive generational shift in India where previous generations believed in first saving and then buying – even if it took years or ultimately going without.
Consumer credit companies such as TVS Credit and Bajaj Finserv have been increasing the share of their offerings to these niche segments not covered by conventional lenders and NBFCs.
The loans are known as EMI’s (equated monthly instalments) and are used to buy various goods, including mobile phones, consumer durables and small-ticket items on easy, no-cost EMIs via loans or credit cards.
It is the segment of youthful, low-income but tech-savvy consumers that fintech lenders are targeting – half the small loans are of Rs5,000 or less.
The country’s largest AI-enabled consumer lending platform, ZestMoney, noted in a report that it had seen more than 125% growth in EMI funding.
E-commerce majors such as Amazon, Myntra, Flipkart, MakeMyTrip, Decathlon and Paytm, among others, have seen a substantial surge in online sales in the past year due to EMI financing schemes – and digital payments mean no cash.
The New India is not afraid of debt – signalling a major uplift in consumer demand for decades to come.