When fresh-out-of-college job seekers, usually in the 22 years to 26 years age group, enter the country's labour force, they often go on a borrowing spree, falling prey to the allure of personal loan offers made by banks and NBFCs
An increasing number of loans are being taken by millennials to funds a big party, purchase designer wear, the latest tech toy, or to plan a fancy 'vacay'. It is on these very loans being sourced by new job entrants from banks and non-banking financial companies (NBFCs) that delinquencies are on the rise, reports DNA.
When fresh-out-of-college job seekers, usually in the 22 years to 26 years age group, enter the country's labour force, they often go on a borrowing spree, falling prey to the allure of personal loan offers made by banks and NBFCs. Over time, finding themselves unable to manage the payouts to the respective lenders, they end up defaulting on such loans.
The report uses data from credit bureau Experian to shed light on the share of millennials in such loans, which is over 50 percent by volume. The data also suggested a seven percent rise in millennials' contribution to such loans between 2015 and 2019.
On the whole, there has been a 70 percent rise in delinquencies on personal loans in December 2018, pushing the overall figure to Rs 36,723 crore in May. On the other hand, consumer loan defaults have risen by 8.3 percent to Rs 5,280 crore.Jonathan Bill, CEO and co-founder of CreditMate, a technology platform for collection of bad debt told DNA, "India is a prepaid country. The graduates who join the workforce are new to credit. Often, they do not understand how to manage loans. They end up with multiple loans which is easy to access."Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.