Diwali, the festival of lights, holds immense significance for the people of Maharashtra, a state renowned for its vibrant culture and traditions. Amidst the celebrations and the joy of togetherness, Diwali also marks a period of increased financial activity, driven by a surge in demand for loans.
During the festive season, businesses witness a surge in loan demands, especially in MSMEs supplying popular segments like food, apparel, electronics, and appliances. There's a notable increase in car loan requests, particularly for mid-segment SUVs, with a rising trend in tier 2 and tier 3 cities. The credit demand, largely originating from tier 3 cities, is driven by the financial needs of MSMEs and increased consumer purchases of various goods, including white goods, vehicles, clothing, and decor. This trend underscores the significant role smaller cities play in driving economic activity during the festive period.
The festive cheer and the desire to adhere to traditions result in a spike in spending, especially for new clothes, home décor, electronics, and gold jewellery. To finance these purchases, many individuals turn to loans, contributing to a record-breaking demand for loans in October, driven by the festive season.
NBFCs in Maharashtra experienced a surge in loan disbursements during October, with gold loans leading the charge. This trend is unsurprising, given the importance of gold in Diwali celebrations.
In addition to gold loans, personal loans are also popular during Diwali due to their flexibility and ability to be used for a variety of purposes, including financing festive shopping, home renovations, or travel expenses.
Consumer durable loans are another popular choice during Diwali, as individuals seek to upgrade their homes with new electronics, appliances, or furniture.
Home improvement loans also see a boost during Diwali, as families use the occasion to renovate or embellish their homes, adding to the festive ambiance.
The increased demand for loans during Diwali has a positive impact on Maharashtra's economy, boosting sales across various sectors, including retail, electronics, construction, and travel. It also leads to job creation and overall economic activity.
Furthermore, the higher loan disbursements during Diwali contribute to revenue growth for banks and non-banking financial companies (NBFCs). The overall positive consumer sentiment and willingness to spend during Diwali reflect a thriving economy in Maharashtra.
