The perils of the 'push' loan phenomenon
Business Standard|November 11, 2024
Rural households are increasingly depending on borrowed money to meet everyday consumption needs, a practice that is not sustainable in the long run
TAMAL BANDYOPADHYAY
The perils of the 'push' loan phenomenon

India's fast-moving consumer goods sector grew 5.7 per cent by value and 4.1 per cent by volume in the July-September quarter driven by rural demand, consumer intelligence firm NielsenIQ said in its quarterly update last week. Yet, many feel that the state of India's rural economy, particularly rural indebtedness, is a matter of concern. Some non-banking financial companies (NBFCs) are complicating the scene further by trying to fish in troubled waters.

The Reserve Bank of India (RBI) has taken note of the growing issue of "push" loans - loans that are aggressively marketed to individuals who may not fully grasp the long-term financial consequences. This is mostly happening in rural India, and a slew of factors is leading to unsustainable levels of debt.

One of the root causes is the lack of sufficient employment opportunities in rural India. Economic growth has not translated into adequate job creation, especially in non-farm sectors. Meanwhile, the ease of access to credit, combined with the proliferation of 24/7 delivery services, has fuelled higher consumption levels in rural pockets. This consumption is often beyond what individuals can afford, creating a significant gap between the growth in income and rising consumption needs. People are being lured into taking loans for goods and services that are not essential, further pushing them into debt.

As a result, rural households are increasingly depending on borrowed money to meet everyday consumption needs, a practice that is not sustainable in the long run. The problem is compounded by the fact that the income sources of the rural economy, which is largely dependent on agriculture, are unstable, affected by unpredictable monsoons, fluctuating commodity prices, and rising input costs. Instead of being mindful of this, some NBFCs are capitalising on this mismatch, providing loans for consumption, sometimes at usurious rates.

Bu hikaye Business Standard dergisinin November 11, 2024 sayısından alınmıştır.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

Bu hikaye Business Standard dergisinin November 11, 2024 sayısından alınmıştır.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

BUSINESS STANDARD DERGISINDEN DAHA FAZLA HIKAYETümünü görüntüle
Business Standard

Qcom firms flouting domestic laws: CAIT

Top 3 companies got ₹54K cr FDI but used only ₹1.3K cr lawfully

time-read
1 min  |
November 14, 2024
AI may create 2.73 mn jobs in India by 2028
Business Standard

AI may create 2.73 mn jobs in India by 2028

Amid intense debates over artificial intelligence (AI) and generative AI (GenAI) causing job loss going forward, a study by ServiceNow, in collaboration with Pearson, has projected that AI could actually drive employment growth, creating an estimated 2.73 million jobs in India by 2028.

time-read
1 min  |
November 14, 2024
Business Standard

Child insurance: Waiver of premium can help secure education goal

Vineet Kumar (name changed on request), a 32-year-old Faridabad-based advertising executive, is the father of a one-year-old. While he finds fatherhood fulfilling, he admits to certain anxieties. \"I do sometimes worry about what would happen to my child if I am not around,\" says Kumar.

time-read
2 dak  |
November 14, 2024
More appetite for Swiggy than Zomato in long term
Business Standard

More appetite for Swiggy than Zomato in long term

Brokerages bullish on its shares, give 'buy' rating to stock

time-read
2 dak  |
November 14, 2024
Business Standard

F&O segment gets 45 additions

The stock exchanges on Wednesday announced the addition of 45 stocks in the new list of scrips eligible for trading in the futures and options (F&O) segment, including Zomato, Jio Financial, Paytm, Delhivery, and Avenue Supermarts.

time-read
1 min  |
November 14, 2024
Expansion, operational gains a positive for Hindalco
Business Standard

Expansion, operational gains a positive for Hindalco

Consolidated net sales of Hindalco Industries stood at ₹58,200 crore, up 7 per cent year on year (Y-o-Y) and 2 per cent quarter on quarter (Q-o-Q) in the second quarter of the current financial year (Q2FY25), with better realisations and efficiencies in India.

time-read
2 dak  |
November 14, 2024
Market regulator bats for easing angel fund norms
Business Standard

Market regulator bats for easing angel fund norms

Market regulator Securities and Exchange Board of India (Sebi) may soon allow angel funds to expand the scope of investors by including Hindu undivided families (HUFs), family trusts, and sole proprietorships, among others.

time-read
1 min  |
November 14, 2024
Business Standard

Sebi takes up review of custodian norms

Capital market regulator Securities and Exchange Board of India (Sebi) has proposed measures to ease operations and compliance by custodians — entities which manage foreign portfolio investors (FPIs).

time-read
1 min  |
November 14, 2024
FMCG sector's defensive cloak feels tear of market forces
Business Standard

FMCG sector's defensive cloak feels tear of market forces

The fast-moving consumer goods (FMCG) sector is losing its status as a defensive sector.

time-read
2 dak  |
November 14, 2024
Sebi mulls action for lapses in AI usage
Business Standard

Sebi mulls action for lapses in AI usage

The Securities and Exchange Board of India (Sebi) on Wednesday proposed norms to specify responsibilities on its registered entities like mutual funds, stock brokers and market infrastructure institutions (MIIs) for the use of artificial intelligence (AI) and machine learning (ML) tools.

time-read
1 min  |
November 14, 2024