Survive on credit! People are borrowing more than they are depositing in banks.

The financial habits of Indian people have changed in the last few years. A recent report paints a worrisome picture in this regard. The report shows that Indian households are borrowing more than they deposit in banks. This series has been going on continuously for the last three years.

Indians deposited so much money

Citing an Echoscope report by Motilal Oswal Financial Services, Business Standard reported that for the past three years, Indian households have been borrowing more money than they are depositing in banks. According to the report, during the first 9 months of the financial year 2023-24 i.e. April to December 2023, the money deposited by Indian households in banks is equivalent to 4.5% of the country’s GDP.

Took so many loans from banks in 9 months

The report also states that during April to December 2023, Indians borrowed from banks equivalent to 4.9 percent of GDP. Meaning, in the first 9 months of FY 2023-24, Indian households borrowed more from banks than they deposited in banks. Worryingly, this is not a recent trend but has been going on for the last three financial years.

Debt has reached historic highs.

A look at the total debt figures of Indian households gives an idea of ​​the seriousness of the financial situation. Total bank credit to Indian households reached its highest level in December 2023, with total credit reaching 40 percent of GDP, the report showed. On the other hand, net fiscal savings fell to an all-time low of below 5 percent.

This is the Reserve Bank data.

Earlier, such information was also revealed in the data of the Reserve Bank. Net financial savings of Indians fell to 5.1 percent of GDP in fiscal 2022-23, the lowest level in nearly five decades, Reserve Bank data showed. The figure was 7.2 percent of GDP a year earlier in the fiscal year 2021-22. On the other hand, annual fiscal liabilities have increased from 3.8 percent of GDP in FY 2021-22 to 5.8 percent of GDP in 2022-23.

These factors are most responsible.

Motilal Oswal’s report states that factors such as modest growth in people’s incomes, rapid growth in consumption and increased physical savings practices are responsible for the decline in bank deposits of Indian households and increase in loans from banks. Many experts believe that over time, risk-taking for investment is becoming more acceptable among people, especially the younger generation. In such a situation, instead of parking/depositing money in banks, people invest it in instruments with better return prospects.

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