OPINION: Salary delays, business downturn are the major reasons for EMI default

Amidst discussions over a decelerating economy, a new survey has found that salary delays and decline in businesses were the two major causes for debt defaults this year.

The India Delinquency Report 2019 by digital debt collection platform CreditMate used data of more than two lakh defaulting borrowers from around the nation and revealed that delayed salaries (36 per cent) and business downturns (29 per cent) were the two main reasons for debt defaults.


Medical emergencies (13 per cent), loss of job (12 per cent) and going out of the city or country (10 per cent) were the other reasons for default in payment of EMIs.

“The current economic slowdown is affecting debt recovery across the country,” CreditMate said in a statement recently. The survey covered the period from May to November 2019.

“We have been operational for about eight months, but when we spoke to the defaulting borrowers for the reasons for late payment, delay in salary and problems in business were cited as the main reasons,” said Jonathan Bill, Co-founder and CEO, CreditMate.

Around 54 per cent of the defaulters were late payers and non-NPAs, whereas the other 46 per cent were past the 90-day default time and were NPA accounts, Bill shared.

The loans were used by retail and small and medium companies, and the repayments varied from ₹10 to ₹6 lakh.

Backed by Paytm, CreditMate works with over 40 lenders, including banks and NBFCs. The research also revealed that male borrowers were accountable for the major delayed payments at 82 per cent, whereas women borrowers accounted for 18 per cent of the defaults.

In terms of the geography of borrowers and debtors, Goa topped the States for the best payment rate, while Arunachal Pradesh, Haryana, and Delhi were the worst performers. Vadodara, Mumbai, and Patna were the top performers among the cities, while Ludhiana, Chennai, and Bhopal were the worst in payments.