Patna reports lowest literacy levels with only 22% of borrowers aware of their CIBIL score, followed by Kolkata (25%) and Mumbai (25%), reveals research conducted to understand Financial Literacy levels
76% of borrowers do not know their interest amount on loan, research says
50% respondents aware about Mutual Funds; Kolkata leads the research with 66% of people aware about Mutual Funds, followed by Delhi at 61% and Mumbai at 53%
74% of respondents are willing to take Financial Literacy lessons to manage their finances better
The ongoing pandemic has had a drastic impact on the economy and people across the strata of the society. With new reforms, policies being announced regularly, a large section of people are left unclear and confused about their various financial aspects. Financial Inclusion is critical to the success of every nation and Financial Literacy is an important step towards being an inclusive nation.
Home Credit India, a local arm of the international consumer finance provider with operations spanning over Europe and Asia, conducted a research across 7 cities, to understand the levels of financial literacy amongst the borrowers. Close to 1,000 respondents were interviewed in the survey.
The research revealed that 52% of the borrowers understand what a CIBIL score is and its importance. CIBIL score as a parameter that helps in understanding borrowers eligibility for loans. Interestingly this group has already taken a loan and are still not in knowledge of CIBIL. Despite this, 68% of the respondents did not know their CIBIL score. The numbers were lowest than the country average in Patna with only 22% of borrowers aware of their CIBIL score, followed by Kolkata (25%) and Mumbai (25%).
The research also revealed that 76% of the borrowers did not know the interest amount on their loans. They are only interested to know the EMI amount to be budgeted monthly but were found to be unaware of the interest amount separately. Only 17% of borrowers in Delhi, 19% in Jaipur and 24% in Mumbai knew the interest amount on their loans, on asking. On enquiring about the calculations of interest, a close majority of 43% across the 7 cities said that they only had partial knowledge of how their interest on loan was calculated. The respondents were concerned and kept track of their EMI amount while the knowledge of the rate of interest charged and amount of interest was low.