Why borrowers should move to longer-tenure loans to escape debt trap

Those who have loans running should set up a contingency fund

With the economy slowing down, and sectors like auto and auto ancillaries, small and medium enterprises, and so on witnessing job losses and distress, retail loan growth is slowing down, according to Reserve Bank of India data. SBI Mutual Fund chief investment officer Navneet Muhnot, too, pointed out recently that households have been saving less and borrowing more to fuel consumption, a phenomenon he said, cannot continue indefinitely. Credit bureaus, too, have in recent times reported signs of rising stress in lenders’ retail loan portfolios (see box).

Nowadays, banks and fintech companies are ever willing to extend a loan, even to