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Loan Defaults in India Happen Because of This Reason According to a study, delay in salaries account for 36 per cent and business downturn 29 per cent of loan defaults. Other reasons for defaults are medical emergencies, loss of job and being out of the city or country.

By Debroop Roy

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The economic downturn in India is affecting debt repayment, with salary delay being the biggest reason for loan defaults.

According to a study by fintech platform CreditMate, delay in salaries account for 36 per cent and business downturn 29 per cent of loan defaults. The study is based on data from 200,000 borrowers across 30 states. The loan categories were: two-wheeler loans, personal loans, loans to small and medium enterprises, student loans, medical loans and digital loans.
Other reasons for defaults were medical emergencies, loss of job and being out of the city or country.

Online Far Exceeds Offline

About 79 per cent of respondents used online methods for repayment of their loans, indicating a switch from cash for the tech-savvy new generation.
Of those who used online methods to pay, 37 per cent used debit cards while 29 per cent chose digital wallets.
Unified Payments Interface, the central government's flagship payments platform that has seen rapid adoption since being introduced, accounted for one in every five transactions, the report said. Only 13 per cent used netbanking.

Women Better At Paying Back

The study also found that male borrowers accounted for 82 per cent of all late payments, suggesting that women are better at paying back.

Females pay their loans back 11 per cent faster than males, it stated.

Geographical Findings

Among cities, the best performing names include Mumbai, Ahmedabad and Surat while Bhopal, Chennai and Bengaluru are among the ones having worst payment rates.
Goa topped among states for the best payment rate, the study found, while Arunachal Pradesh, Haryana and Delhi were the worst performers.
Debroop Roy

Former Correspondent

Covering the start-up ecosystem in and around Bangalore. Formerly an energy reporter at Reuters. A film, cricket buff who also writes fiction on weekends.
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