Only 18% digital loan borrowers understand data privacy rules: Study

60% of them are worried about how personal data is collected and used by lending apps

Indians are increasingly using digital services for loans and other financial transactions but they are poorly informed about data privacy, said a survey on Wednesday.

Only 18 per cent of borrowers who were surveyed understood data privacy rules and 88 per cent had a superficial understanding, according to Home Credit India’s 'How India Borrows Survey 2023'.

“As India accelerates into the digital lending era, the study underlines a critical concern among borrowers regarding the usage of their personal data by loan companies,” it said.

About 60 per cent of borrowers are worried about how their personal data is collected and used by lending apps. As many as 58 per cent of these borrowers feel that lending apps collect more data than required.

 

Indians in smaller towns and those of Gen Z, people born between 1996 and 2010, show greater concern about the amount of data lending apps collect. As many as 78 per cent of borrowers in Chennai were concerned about data collected. Borrowers in Chennai seem to be more digitally advanced, as 76 per cent of them claimed to understand the usage of personal data.

The survey found that just 23 per cent of Indian borrowers understand that loan apps use personal data. Almost 60 per cent of them said they don’t have any control on the data they share.

As many as “70% of the borrowers feel the need for transparent communication on the usage of personal data. This is mostly driven by males and Gen Z. Borrowers across geographies except South seem to have a similar opinion,” it said.

In terms of digital literacy, 23 per cent of middle-class borrowers have heard about or seen a chatbot service. As many as 43 per cent of borrowers, largely women and Gen Z, find the service as easy to use.

WhatsApp is emerging as a digital channel for loans with 59% of borrowers having received loan messages from the messaging service.

However, only one-fourth borrowers consider loan offers received on WhatsApp as trustworthy, with Gen Z showing more trust.

The study was conducted in 17 cities of Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad, Lucknow, Jaipur, Bhopal, Patna, Ranchi, Chandigarh, Ludhiana, Kochi, and Dehradun. It questioned some 1,842 borrowers aged 18 to 55 and with an average monthly income of Rs 31,000.