Only 18% of borrowers understand data privacy rules in India

NEW DELHI: Only 18 percent of borrowers in India understand the data privacy rules, with the majority of them (88 percent) having a superficial understanding of the subject, a new report said on Friday.

According to global consumer finance provider Home Credit India, about 60 percent of borrowers are worried about how their data is collected and used by lending apps.

Around 58 percent of these worried borrowers also feel that lending apps collect more data than required.

Gen Z and borrowers from smaller towns show higher concern with the amount of data being collected by lending apps.

Among metros, 78 percent of borrowers from Chennai voiced their concern about the amount of data collected.

"The survey not only highlights the preferences of today's borrowers but also emphasizes the need for greater awareness of data privacy," said Ashish Tiwari, Chief Marketing Officer, Home Credit India.

The report surveyed about 1,842 borrowers in the age group of 18-55 years, with an average income of Rs 31,000 per month across 17 Indian cities. Moreover, the report noted that over one-fourth of borrowers opted for online channels for availing loans.

Loans initiated through telecalling increased by 3 percent (from 16 percent in 2022 to 19 percent in 2023), while loans through POS/bank branches saw a decline of 4 percent (from 56 percent to 51 percent).

In keeping with the digital revolution, more than half of borrowers (51 percent) are looking forward to completing their entire future loan application on a mobile app without any physical connection with POS/Banks.

The preference for online loan mediums is primarily driven by younger and aspirational small-town borrowers, with cities like Dehradun at 61 percent, Ludhiana at 59 percent, Ahmedabad at 56 percent, and Chandigarh at 52 percent.

In terms of digital literacy, 23 percent of middle-class borrowers have heard/seen about the chatbot service in the past. About 43 percent of borrowers found chatbot services easy to use, led by Women and Gen Z.

According to the report, WhatsApp is an emerging digital channel for loans, with 59 percent of borrowers having received loan messages on WhatsApp. However, only one-fourth of borrowers consider loan offers received on WhatsApp as trustworthy, with Gen Z showing more trust towards this.

EMI cards continued to be the most preferred medium to take loans, accepted by 49 percent of the borrowers.