The COVID-19 pandemic has severely disrupted the business and financial sphere in India as we know it. The second wave has proven to be much deadlier than the first, both in terms of its destructive impact and countrywide dissemination. With lakhs dead and countless more bereft of jobs and income, the Indian economy has dwindled beyond negative figures, rather unceremoniously. Interestingly, the exorbitant medical bills and related charges have also catalyzed a surge in the demand for fast-paced loans across the country, especially during the second wave.
While the loan demand in Indian borrowers was primarily 13-14% in the pre-COVID days, it steadily mounted to 17-18% in the post-COVID time, between August ’20 and October’20. However, in light of the second wave, these numbers shot up to an all-time high. During April 21 and May 21, the loan demand touched about 20%.
Furthermore, as compared to the first wave, the impact of the virus has been much more during the second wave in Tier- 2, Tier-3, and Tier-4 cities. In fact, the far-reaching effects of the virus conditioned a surge in the loan demand in tier-4 cities to an astonishing 22%, as per the data shared by SmartCoin. It further reveals that, the Pre-Covid demand for medical purposes amongst salaried users was at 15% and amidst the first wave it had risen up to 18-19% level. During the second wave, the loan demand amongst the salaried faction was at 21% while among the merchants, it was merely 11-12%. Once having peaked during the first wave and shooting up to the 15% mark, the loan demand had fallen to the 11-12% level again. However, in the second wave of the coronavirus, it has again shot up to 18%.
The most crucial need is addressing the increasing demand for token monetary loans amongst the working class that is not covered under insurance plans. The average ticket size of a loan being ₹6,000 depicts that timely assistance in urgent crises can help in protecting and saving countless more lives. It is to be seen that the demand for loans in COVID-19 times has significantly amplified in Tier 2, 3 and 4 cities during the two covid-19 waves. The loan demand has escalated drastically in small towns and rural regions amid the second wave. The salaried and self-employed users of Tier -1 and Tier-2, 3, and, 4 respectively have an annual income average of ₹ 22,000. But, the testing circumstances imposed by the pandemic require fast-paced loans to meet untoward finances.
While Tier 1 locations exhibit a higher concentration of salaried individuals, the Tier 2, Tier 3, Tier 4 locations are marked by a higher presence of self-employed users. With Tier 2, 3, 4 regions witnessing a greater impact in the second wave as compared to the first wave, the rise in medical loans among self-employed users is chiefly instinctive.
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