UPI second-most chosen method to repay digital loans after e-NACH, says report

A recent report has said that Unified Payments Interface (UPI) has emerged as the second-most preferred repayment method for of digital loans after e-NACH or electronic National Automated Clearing House. 

CASHe, a personal loan app, in its report, Financial Mood of the Millennials 2022-23, said that about 36 per cent of the respondents chose e-NACH, whereas 27 per cent chose UPI for their loan repayment, indicating the increasing reach of the digital payments platform.  

The report added that about 84 per cent of its customers prefer to take a credit line over personal loans (14 per cent) and Buy Now, Pay Later (BNPL). Satchetised (short-term, small ticket-size) loans of less than Rs 10,000 are preferred by 49 per cent of millennials.  

“A significant credit demand from bureau-based prime, around 44 per cent and near-prime (around 38 per cent) millennials, thereby reinforcing the need for unsecured and hassle-free digital credit products that are easily accessible by all,” CASHe said in a statement. 

The report added that millennials are opting for short-term digital credit mainly for two reasons: Unforeseen medical and monthly expenses. This is followed by emergencies such as shopping, home renovation, and education.  

Bangalore seems to lead all the cities in India for credit demand followed by Hyderabad, Pune, Ghaziabad, and Gurgaon, the report said. 

Earlier, UPI's parent orgsnisation, the National Payments Corporation of India (NPCI) said that UPI has seen a massive jump in monthly transaction count as it touched 8.7 billion in March 2023, which is a 60 per cent growth. UPI’s total transaction value touched Rs 14.05 lakh crore, reporting a growth of 46 per cent.  

The February numbers in terms of transaction count touched 7.5 billion while the transaction value touched Rs 12.35 lakh crore.  

In January 2023, UPI processed more than 8 billion transaction for the first time in a month, and Rs 12.98 lakh crore for the value of transactions. 

Investment patterns 

The report highlighted that when it comes to investments, Systematic Investment Plan (SIP) is the most popular option for online investors, accounting for 35 per cent of their investing activities. This is followed by interest in digital gold (18 per cent), tax-saving products (15 per cent), goal-based investments (10 per cent), real-estate (9 per cent) and fixed deposits (5 per cent). 

It further added that 68 per cent of millennials seek assistance from financial advisors for making investment decisions, whereas around 45 per cent trust social media as a prime source to make investment decisions. 

On retirement planning, the report found that millennials are cautious about savings and are starting early for their post-retirement life. More than 33 per cent of millennials stated they believe in saving 20 per cent of their annual income to become financially secure for retirement.