Chennai: Around 60% of borrowers have EMIs that are nearly equal or exceed their total monthly family incomes, finds a survey. Forty per cent are managing existing EMIs by taking new loans or using credit cards, a pattern that can indicate a growing debt trap. Festive season buying using debt can add to the woes.
As per debt and loan resolution platform Expert Panel’s data based on borrower inquiries, 60% of borrowers have EMIs that either exceed or nearly equal their total monthly family income.
Around 26% of borrowers took out loans because of medical emergencies or health issues, making it the largest cited reason. Another 22% borrowed for family or personal expenses, including weddings and education, while 18% cited business or job-loss-related requirements. Household and daily needs accounted for another 15%.
Around 40% are managing existing EMIs by taking new loans or using credit cards, a pattern that can indicate a growing debt trap.
The problem becomes more visible when borrowers struggle to repay. Job loss or salary reduction was cited in 31% of cases where borrowers could not repay, followed by high EMI burden relative to income at 28%. Multiple loans or over-borrowing accounted for another 19%, while medical or family emergencies contributed to 12%.
The consequences of repayment difficulties are not restricted to finances. Among the borrowers surveyed by Expert Panel, 39% reported recovery calls or abusive language, while 28% faced frequent calls from multiple lenders. A further 11% reported home or workplace visits and 8% reported threats of legal or police action. The broader data also shows that 35% of borrowers were facing some form of harassment, while 17% reported severe harassment involving threats, abusive calls or home visits. Additionally, 20% had received legal notices from lenders. The RBI Integrated Ombudsman Scheme received 85,281 loan-related complaints in FY24, a 42.7% year-on-year increase, according to the Expert Panel’s factsheet.
During the festive season discretionary spending can combine with existing financial obligations. A festive-season loan may therefore not be an isolated financial decision; it can become an additional EMI layered on top of existing obligations.
“Festive spending is often driven by emotion, social expectations and the desire to make the occasion special, but a loan converts that one-time expense into a recurring financial commitment,” said Anurag Mehra, Director, Expert Panel.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: deccanchronicle.com
