The festivities of Diwali have begun lighting up the houses around India, and along with that, comes an economy phenomenon—festive financing. In a country such as India, wherein festivals are not just limited to cultural celebrations but are also a time for shopping and gifting, it gives in to a spree on a large scale. Consumerism and business houses around India have an urgent necessity to understand the phenomenon behind festive financing.
Understanding Festive Financing
Festive financing encompasses the complete range of financial products and services tailored for the expenditure that peaks during festival seasons. In India, a great spurt in consumer expenditure is seen during the festivals of ganpati, Diwali, Eid, Durga Puja, Christmas, and many more. Financial institutions and retailers have now capitalized on this boom through personal loans, credit cards, and consumer finance schemes.
- Increase in Consumer Loans
In the last few years, consumer loan has been sharply increasing recently during festivals. NBFCs and banks are giving customized personal loans that carry attractive interest rates with minimum documentation and sanctioning process. Loans thus come handy for impulsive buying over festivals, which range from an electronic gadget to any high-end luxury product.
- Credit Cards and Festive Offers
Credit cards are the most prominent source of festive financing. Most banks start special campaigns during the festival season, offering cash back, rewards, and interest-free EMIs on various purchase categories. These offers result in consumer spending as the consumers will pay back without any extra cost over a period of time. In addition, retailers also partner with the card issuers to offer exclusive offers for the cardholders.
- Buy Now, Pay Later (BNPL) Schemes
The newest entrant in the BNPL schemes is festive financing add-on. BNPL schemes are all about providing an opportunity to the customer to buy goods and then postpone their payment with virtually no interest over a term. They have struck a very positive chord with younger audiences as well, particularly since BNPL options offer flexibility to help them celebrate their festival without the initial burden of increased expenses.
The Retail Landscape During Festivals
Indian Festive Season mostly impacts the retail. From physical markets to e-commerce businesses, retailers prepare for these festival times. Physical retailers have massive sales promotions whereas the data analytics helps an e-retailer in executing a segmented marketing campaign.
- E-Commerce Boom
Indians, nowadays, shop in ways far different from what prevailed earlier. Online marketplaces have seen an increase in traffic, and companies show the highest sales figures for such periods. The ease of shopping from home with the thrill of discounts of festive sales events has given many an option to do it online.
- Impact on Small Businesses
While large retailers and e-commerce platforms have seen the best of business during this period, smaller firms face difficulties in competing. However, many small enterprises are embracing festive financing options to handle inventory and cash flow. Microfinance institutions and local banks have now come forward to lend them a helping hand to help small enterprises take full advantage of the festive fever.
Cultural Significance and Consumer Behaviour
In India, festivals are very culture-sensitive and consumer behaviour gets a direct effect from such ceremonies. Gift giving, decorating home, and acquiring something new mean prosperity and an onset of something new. Hence, more often than not, the spending associated with it gets treated as a kind of investment and less of consumption.
The Role of Social Media
Social media also decides the festive spending habits. Influencer marketing and advertisements make products attractive during festivals. The gelling of traditional values along with the advanced strategies of marketing thus influence the consumers’ minds to spend more at times.
Challenges and Considerations
All such festive financing attract the mind of consumers despite caution. Loans and credits should be easily accessed for better spending and acquiring debts that may pile up eventually, and one’s decision becomes crucial to determine if individuals are in danger of drowning in a quagmire of debts post-the festivities.
Financial Literacy Initiatives
There is a great desire for initiatives towards financial literacy because of the issues related to festive financing. It empowers the consumers to make savvy financial choices by educating those concerning budgeting, loan terms, and implications that high interest rates have.
Conclusion
Festive financing in India is a unique cultural event and an economic opportunity, and consumers embracing the spirit of the festival become quite important. For business growth, it is one opportunity to gain substantial benefits but should be approached responsibly. Consumers can enjoy their festival with good financial health, thus promoting financial literacy while making the right choice.
What should I consider before taking festive financing?
Before proceeding with it, consider your budget, repayment capability, the total cost of borrowing (including interest and fees), and whether the financing aligns with your financial goals.
Are there specific interest rates for festive loans?
Interest rates for festive financing can vary widely. Many lenders offer promotional rates during the festive season, which may be lower than standard rates. It’s essential to compare offers from different lenders.