The COVID 19 pandemic has left a huge trail of chaos all over the world. People are suffering due to lack of treatment facilities, increased hunger, joblessness, and psychological issues. People are jobless because lockdown restrictions prevent them from being able to return to their jobs. While some continue to work from home, for many it is for a deducted salary package. With no financial income, people are starving as they are struggling to purchase food and other basic amenities; this is true especially in the case of the middle class and the poor. Hence, people have resorted to taking personal loans to meet their immediate survival needs.
Impact of COVID 19 on the personal loan market
According to the International Monetary Fund, India would be among the worst-hit economies due to the COVID 19 pandemic. The estimated fall in GDP for the current fiscal is projected at 4.5%. Why? India is one of the world’s biggest economies with a large population employed in the organized and unorganized sector. The COVID 19 pandemic has caused many of them to lose their jobs and hence their source of earnings.
A recent survey by the Economic Times revealed that nearly 39% of the 3074 respondents, who participated in the study, are facing salary cuts due to the pandemic situation. In fact, another study revealed that during the COVID 19 pandemic, there has been a significant increase in personal loans taken by women, in contrast to males. The shares for personal loans have increased significantly during the pandemic as more people continue to take loans in order to survive. However, a recent report also indicates that people find it difficult to take loans from banks and they resort to taking loans from NBFCs and other instant loan platforms.
The rise and fall of NBFCs and lending platforms during COVID 19 Pandemic
COVID 19 pandemic has caused a rise in Non-Banking Financial Companies. This is because people find it easier to obtain personal loans from these non-banking agencies. What’s more? The other alternative to Non-Banking Financial Companies (NBFCs) are online lending platforms. The COVID 19 pandemic has seen an increase in the number of online lending platforms, as lockdown restrictions make it difficult for people to go out to NBFC agencies or the bank, people can avail personal loans from instant loan apps like StashFin at a click of the button on their mobile devices.
The sudden spike in NBFCs and other lending platforms that was seen during mid 2020 has now gradually receded due to inability of people to pay debts. Unless life returns to normalcy and people are allowed to go about their businesses, jobs and economic activities, even these instant personal loan apps will find less takers. It is one thing to take a loan and another to pay EMIs on time.
However, companies like StashFin are rising up to the occasion and providing moratorium, EMI snooze facility, loans at a reasonable rate of interest, loans for financial emergencies even during weekends, credit line card facilities, and a lot more. The demand for personal loans will continue to go up during the pandemic and post-pandemic.
