“Cross-sectional study of loan availing consumers in rural India” Abhisek Nayak Jeevan Lohar Safayet Karim Shweta Singh Subhasis Dutta Gupta 1
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“Cross-sectional study of loan availing consumers in rural
India”
Abhisek NayakJeevan LoharSafayet KarimShweta Singh
Subhasis Dutta Gupta1
Agenda
• Background & Objective
• Data sanitation process
• Demographic analysis
• Loan taking behaviour
• Attributes affecting Overall satisfaction
• Segment Analysis on Psychographics
• Recommendations
2
3
Project Background and Objective
Project owner: A private BankResearch design: Cross Sectional studyData Collection Method: Primary dataResearch Instrument: QuestionnaireTarget Group: Loan taking people living in town, where population is less than 1 lakh.
Objectives: 1. To understand demography at all sample level and zone level.
2. To understand loan taking behavior at all sample level and compare the behavior for North and South India
3. To evaluate important attributes affecting overall satisfaction
4. To understand the psychographic segmentation
Data Sanitation
• After checking all the values, all the miscoded values were assigned as “NA”
• Imputed this missing values with multivariate imputation method
• Use “KNN” method to impute the miscoded values
4
No. of observations
Total no. columns
Total no. of missing values
% of missing value
1550 55 4291 5.03
All level demographic analysis
5
0.0
10.0
20.0
30.0
40.0
2.6
13.7 13.95.0
13.77.4
1.9
31.4
1.3 2.2 2.7 4.1
Occupation Level
Occupation
% 0.05.0
10.015.020.025.030.035.0
1.5 3.1 2.7
15.7
27.0
15.1
31.5
3.4
Education Level
Education
%Less than 3 3 to 5 More than 5
0.010.020.030.040.050.060.0
27.4
51.2
21.4
Dependent Level
Dependency
%
Yes No0.0
10.020.030.040.050.060.070.080.090.0 81.5
18.5
Earning Regular Income
Earning%
6
Less than 75,000
75,000 – 1,50,000
1,50,001 – 3,00,000
3,00,001 – 5,00,000
More than 5,00,000
0.05.0
10.015.020.025.030.035.040.045.0
4.8
17.0
38.8
27.8
11.5
Annual Household Income
HH Income
%
Agric
ultur
al lan
d
Reside
ntial
plots
Pucc
a hou
se
Kutcha
hous
eSh
op
Others
0.0%10.0%20.0%30.0%40.0%50.0%60.0%
45.6%36.3%
50.0%
2.3% 4.6% 4.3%
Immovable Properties
Properties
%
Two –
whe
eler(s
)
Four –
whe
eler(s
)
Trac
tor(s)
Commer
cial v
ehicl
e(s)
Machin
ery (
Thra
sher
, har
veste
r, su
garca
ne cr
ushe
r)
Home a
pplia
nces
(Refr
igera
tor, T
V)
Lives
tock (
cattl
e, po
ultry
)
Bank /
Post-
office
Dep
osits
Compa
ny sh
ares
Gover
nmen
t or C
ompa
ny B
onds
Others
0.0%20.0%40.0%60.0%
61.4%46.0%
14.8%
46.4%
6.4%26.5%
9.2%21.0%
2.3% 2.1% 1.2%
Movable Properties
Properties
%
North Occupation: Self Employed Professional
(38.3)Education Level: Graduate / Post graduate
(General - BA, MA, B.Sc. etc.) (39.1%)Dependent Members: 3-5 (46.4%)
Regular Income: Yes (96.2%)Annual Household Income: 1,50,001-
3,00,000 (39.1%)
SouthOccupation: Self Employed Professional
(39.7%)Education Level: Graduate / Post
graduate (General - BA, MA, B.Sc. etc.) (33.3%)
Dependent Members: 3-5 (61.1%)Regular Income: Yes (74.9%)
Annual Household Income: 1,50,001-3,00,000 (40.8%)
EastOccupation: Self Employed Professional
(32.6%)Education Level: Graduate / Post
graduate (General - BA, MA, B.Sc. etc.) (29.5%)
Dependent Members: 3-5 (48.2%)Regular Income: Yes (78.8%)
Annual Household Income: 1,50,001-3,00,000 (37.8%)
WestOccupation: Businessman/Industrialist
with no employee(29.6%)Education Level: SSC/HSC (30.2%)Dependent Members: 3-5 (49.0%)
Regular Income: Yes (83.1%)Annual Household Income: 1,50,001-
3,00,000 (38.2%)
Zone wise Loan Taker’s Profile
7
Zone-wise demographic analysis
8
23.91
20.45
9.17
17.21
4.16
8.89
5.99
8.46
0.63 0.78 0.35
22.25
14.38
4.63
26.75
1.25
12.00
2.75
11.63
1.25 1.63 1.50
30.85
22.20
2.54
18.31
1.36 0.51
12.3710.17
0.85 0.68 0.17
29.11
20.37
5.52
17.61
2.533.68
13.35
5.98
1.38 0.46 0.00
Movable Property
East West North South
9
Zone-wise Immovable property segmentation
Agricultural land Residential plots Kutcha house Shop Pucca house Others
East
West
North
South
36.07
21.04
0.58
3.82
36.18
2.31
30.50
22.97
1.16 1.54
38.42
5.41
24.46 24.46
4.282.75
41.90
2.14
30.91
35.63
1.97 4.33
24.80
2.36
East West North South
10
Less than or equal to 1,00,000
1,00,001– 3,00,000
3,00,001 – 5,00,000
5,00,001- 10,00,000
More than 10,00,000
0.05.0
10.015.020.025.030.0
14.3
23.5 25.921.0
15.2
Loan Amount of all sample
Loan Amount
Perc
enta
ge
3 mon
ths be
fore
3-6 m
onths
6 mon
th - 1
year
1-1 an
d a ha
lf yea
rs be
fore
2 or m
ore y
ears
befor
e0.0
10.0
20.0
22.3 20.1 22.7 23.0
11.9
Time when loan was availed
Loan Period
Perc
enta
ge
Less than 2 weeks
3 – 4 weeks 5 – 6 weeks More than 6 weeks
0.0
20.0
40.0
60.0
80.070.1
22.16.3 1.5
Duration for processing of loan by bank
Period
Perc
enta
ge
Crop
loan
Lives
tock l
oan
Vehicl
e loa
n
Gold lo
an
Educa
tion lo
an
Housin
g loa
n
Perso
nal loa
n
Other
s0
1020304050607080
9.50.5
72.8
4.4 0.36.9 4 1.6
Breakup of loan type
Type of loan
Freq
uenc
y
Loan-taking Behaviour: At all sample
11
Less than 3 years
3 – 5 years 5 – 10 years
More than 10 years
0.010.020.030.040.050.060.0
28.8
58.3
8.84.1
Tenure of loan repayment period
Period
%
Up to 2 banks
Up to 5 banks
Up to 7 banks
More than 7 banks
0.010.020.030.040.050.060.070.080.090.0
89.0
10.00.6 0.4
Banks visited
Banks
%
0 – 25% 25 – 50% 50 – 75% 75 – 100%0.0
10.020.030.040.050.0
4.811.5
34.9
48.7
Requirement met by loan
Requirement
%
Gold Vehicle Land House0.0
20.040.060.080.0
6.5
63.4
20.49.7
Property Mortgaged
Property
%
Agricu
ltura
l pur
pose
Purch
ase o
f lan
d
Purch
ase/
cons
tructi
on of
hous
es
Purch
ase of
vehic
les
Busin
ess/s
hop s
et up
0.0
20.0
40.0
60.0
11.0 5.3 8.6
66.1
9.0
Objective fulfilled with the loan
Objective
%
12
Overall Summary
Vehicle Loan is the leading loan category and Livestock is the least
Average Loan Amount is 3-5 Lakhs
Most of them took loan one and a half years back
Loan Processing took 2 weeks for approval
Average duration of loan repayment period is 3-5 Years and maximum of 2 banks
were approached
Mortgage Property is Vehicle to get the loan approval
13
Independent Samples Test
Levene's Test for Equality of Variances t-test for Equality of Means
F Sig. t df Sig. (2-tailed)
Mean Difference
Std. Error Difference
95% Confidence Interval of the Difference
Lower UpperQ9 (Loan Type)
Equal variances assumed .423 .516 -.051 608 .960 -.006 .126 -.253 .241Equal variances not assumed -.051 517.096 .959 -.006 .124 -.250 .238
Q10 (Loan Amount)
Equal variances assumed .064 .801 .216 608 .829 .024 .110 -.193 .241Equal variances not assumed .217 503.671 .828 .024 .110 -.192 .240
Q11 (Loan Taken)
Equal variances assumed 4.875 .028 -1.656 608 .098 -.183 .110 -.399 .034Equal variances not assumed -1.628 468.657 .104 -.183 .112 -.403 .038
Q13 (Loan Processing Time)
Equal variances assumed 1.770 .184 -.368 608 .713 -.022 .059 -.138 .094Equal variances not assumed -.380 550.258 .704 -.022 .057 -.134 .091
Q14 (Repayment Period)
Equal variances assumed 5.744 .017 1.528 608 .127 .100 .065 -.028 .228Equal variances not assumed 1.544 512.997 .123 .100 .065 -.027 .227
Q15 (Bank Visits)
Equal variances assumed 1.260 .262 .655 608 .513 .022 .034 -.044 .088Equal variances not assumed .660 508.923 .510 .022 .033 -.043 .087
Q16 (Requirement Met)
Equal variances assumed .085 .771 -.451 608 .652 -.030 .066 -.159 .099Equal variances not assumed -.454 506.301 .650 -.030 .065 -.158 .099
Q17 (Property Mortgaged)
Equal variances assumed 53.866 .000 -.085 608 .932 -.006 .072 -.147 .135Equal variances not assumed -.093 605.558 .926 -.006 .066 -.135 .123
Q18 (Loan Purpose)
Equal variances assumed 48.640 .000 3.026 608 .003 .268 .089 .094 .442Equal variances not assumed 3.256 596.648 .001 .268 .082 .106 .430
Difference of Loan-taking Behaviour: North vs South
Key differences:
• Significant difference (at 95% C.I.) observed for loan purpose for people between North-India and South-India
Q18 (Loan Purpose)
Agriculture purpose
Purchase of land
Purchase/Construction of houses
Business/shop set up
• As the F-value for Q17 (Property Mortgaged) is significant, so further investigation revealed at 95 % confidence level
difference for property Mortgaged for people between North-India and South-India.
Q17 (Property Mortgaged)
Gold
Land
House
14
15
Model Summary
Model R R Square Adjusted R Square
Std. Error of the
Estimate1 .849a .721 .721 .4172 .880b .774 .773 .3763 .886c .785 .784 .3674 .888d .789 .789 .363
Coefficientsa
ModelUnstandardized
CoefficientsStandardize
d Coefficients t Sig.
95.0% Confidence Interval for B Collinearity Statistics
B Std. Error Beta Lower Bound
Upper Bound Tolerance VIF
1 (Constant) .923 .049 18.996 .000 .828 1.019 Q19A .785 .012 .849 63.265 0.000 .761 .810 1.000 1.000
2 (Constant) .373 .053 7.098 .000 .270 .476 Q19A .671 .013 .726 52.831 0.000 .646 .696 .775 1.290Q19E .253 .013 .260 18.959 .000 .227 .279 .775 1.290
3 (Constant) .195 .055 3.549 .000 .087 .303 Q19A .616 .014 .666 44.539 .000 .589 .643 .622 1.608Q19E .205 .014 .211 14.562 .000 .177 .232 .663 1.509Q19C .146 .016 .141 8.950 .000 .114 .178 .560 1.787
4 (Constant) .101 .057 1.768 .077 -.011 .212 Q19A .611 .014 .661 44.546 .000 .584 .638 .620 1.614Q19E .175 .015 .180 11.714 .000 .145 .204 .579 1.727Q19C .117 .017 .113 6.888 .000 .083 .150 .508 1.967Q19D .090 .016 .087 5.722 .000 .059 .121 .589 1.698
a. Dependent Variable: Q19F
a. Predictors: (Constant), Q19Ab. Predictors: (Constant), Q19A, Q19Ec. Predictors: (Constant), Q19A, Q19E, Q19Cd. Predictors: (Constant), Q19A, Q19E, Q19C, Q19De. Dependent Variable: Q19F
Evaluation of important attribute of overall satisfaction
Results of Multiple Regression analysis:
16
• For overall satisfaction the attributes which are most significant in terms of ranking are:1. Time taken for your loan application processing2. Customer service3. Timely disbursement of funds4. Loan collection process Inclusion of variable Q.19B (Documentation and proof requirements) in the model does not
improve the adjusted R² and also enhances multicollinearity problem.• The overall adjusted R² is 0.789 for the model• The fitted Regression line:Ovarallstatisfaction= 0.661 * (Time taken for your loan application processing) + 0.180* (Customer service) + 0.113 * (Timely disbursement of funds) + 0.087 (Loan collection process)
Variable % of Importance RankQ19A. Time taken for your loan application processing
63.50 1
Q19E. Customer service 17.29 2
Q19C. Timely disbursement of funds 10.85 3
Q19D. Loan collection process 8.36 4
17
Psychographic Segment
ParametersCluster
1 2Job is the greatest source of security for me. Agree NeutralI spend within the amount I earn and do not believe in borrowing money or taking credit. Agree NeutralBorrowing money is a source of discomfort; I would like to pay it back immediately. Agree NeutralIf I have to take loan, I can mortgage my property. Agree NeutralI will take loan even at a quite high interest rate to meet my goals (business expansion or asset purchase). Neutral
Disagree
I prefer banks which provides me loan for less collateral, even if interest rate is higher. AgreeDisagre
eI would always like to take more loans to expand my business. Agree NeutralI would prefer to take loans from banks which require no guarantor. Agree AgreeI prefer obtaining loans from public sector banks rather than private banks. Agree NeutralI prefer taking loans from the same bank every time. Agree NeutralI take loans based on the suggestions by relatives, friends etc. Agree NeutralMoney lenders in need are friends indeed. Agree NeutralI believe I have a strong credit worthiness to get loans. Agree AgreeNon-Banking Financial Companies (NBFCs) understands customer requirements very well. Agree NeutralI will go to organised lenders like NBFC for loans, before approaching local moneylenders. Agree Agree
18
ZONE wise Cluster Break-up
Cluster Number of Case
Total1 2
ZONE
East 303 276 579West 147 214 361North 100 135 235South 156 219 375
Total 706 844 1550
• Cluster 1 : 706 respondents• Cluster 2: 844 respondents• The respondents of Cluster 1 are Risk-averse individuals whereas in Cluster 2
the respondents are smart and tactful individuals.
Final Cluster Centers
Cluster
1 2Q20A 3.8 3.1Q20B 3.7 3.1Q20C 4.0 3.1Q20D 3.6 2.6Q20E 3.4 2.2Q20F 3.6 2.5Q20G 3.8 3.1Q20H 4.0 3.6Q20I 3.7 3.4Q20J 3.6 3.3Q20K 3.8 3.2Q20L 3.8 2.9Q20M 3.9 3.5Q20N 3.9 3.5Q20_O 4.0 3.6
Cluster 2 Characteristic compared to Cluster 1
Demographic
Smart people are more into proprietary business and industry with high regular income and annual HH income.
There are more graduate/post graduate among smart people
They have more number of movable properties with respect to two wheeler, four-wheeler and commercial vehicles but less number in tractors.
In terms of immovable property they have investment more on Puccha house.
Loan taking
Smart people have higher tendency to take more amount of loan in vehicles.
They frequently mortgage their vehicles to take their loan
Their main purpose is to take loan for purchase of vehicles.
19
Recommendation
• North zone in cluster 2 respondents will be more profitable for the following reasons:
1. Within North zone in totality 96.2% of respondents have regular income and thus
will have better repayment capacity.
2. North zone Cluster 2 respondents are both smart and well educated and thus
proper loan schemes will be attractive for them.• Based on the findings we can perform further zone-wise campaigning for loan
promotion
20
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