Almost half of the Indians living in urban areas borrow money from friends and relatives not from any financial institutions. The Max New York Life Insurance and the National Council for Applied Economic Research (NCAER) have jointly conducted a survey on ‘what does the Indian people do when they need money’.

The survey revealed that more urban households borrow money from friends and relatives when compared with their rural counterparts.

The survey revealed further that at least 41% urban Indians borrow from friends and relatives when they need money to meet social expenses. Health concern is one of the biggest causes behind the need of money in urban India.

According to the survey, 45% people borrow money to meet the high expense of medical treatment.

The survey has proved the financial institutions’ assumption wrong that they have a deep penetration in urban cities. It seems, most banks and insurance companies have concentrated on tier II and tier III centers only to grow their business.

While, in rural areas, where the social bond is more strong in comparison with urban people, only 38% households borrows money from friends and relatives. At the same time, the trend of borrowing from local moneylenders is far higher with 20.7%. However, Urban India (7.4%) does not believe to take money from unorganized moneylenders.

On the other hand, People have great awareness about insurance in rural as well as urban areas both. 72.9% of rural India is well aware of the various insurance schemes to invest their money. However, the urban India (90.2%) showed better awareness for that.
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