Voices Pushpesh Pant Balaji Vittal Ajai Sahni Ganesh Saili Shampa Dhar-Kamath mata amritanandamayi THE new sunday express MAGAZINE Buffet People Wellness Books Food Art & Culture Entertainment February 11 2024 SUNDAY PAGES 12 The Debt Rattle >> Credit card defaults rose to `4,072 crore at the end of March 2023, according to the RBI >> Outstanding credit card debt reached `2.10 lakh crore in March 2023, up from `1.64 lakh crore in March 2022 >> Credit card defaults have risen by `951 crore in FY23 from `3,122 crore in FY22 >> A study by TruBoardPartners noted that the amount outstanding on credit cards nearly quadrupled from FY21 to FY23, while transaction value doubled Swipe, Spend, Regret Credit card debt doesn't just skew family budgets; it triggers a cascade of humiliation and anxiety, causing a massive household crisis. The frightening nature of plastic debt underlines the need for financial awareness and stringent regulatory frameworks T By anjana vaswani “It was incredibly hard on my family; for all of us, it was a constant struggle to keep life on track amidst the stress and chaos.” he world two years ago was a nightmare for many entrepreneurs like Kirankumar Shetty whose bridge works business was hard hit. Delayed incoming payments became a financial spiral, saddling the 44-year-old with a debt of a staggering `30 lakh across eight long-held credit cards. The toll was not just monetary Emotionally, Kirankumar was . isolated, cut off from social circles. His world quickly shrank to his immediate family “I didn’t want to meet anyone,” he recalls. “When people find out you’re . in trouble, they stop taking your calls, and they start avoiding you.” The constant pressure from banks, unrelenting calls and threat of legal action loomed large, casting a shadow over the everyday lives of the Shettys. “Every rupee owed felt like a chain around my neck,” the Hubbali-based Shetty recalls. This scenario is hardly unique to Shetty Along with the . significant rise in credit card usage as repoted by RBI in 2023, The debt grew too: by March 2023, credit card defaults rose to `4,072 crore, accounting for 1.94 per cent of total credit card debt. Outstanding credit card debt exceeded `2 lakh crore in April 2023, a notable increase of almost 30 per cent within the financial year. With 8.6 crore cards in circulation, up 15 per cent over the previous year, these figures – the increase in credit card usage and outstanding balances – ironically point to a more robust consumer economy with greater access to credit. Encapsulated within these numbers, however, are also the everyday miseries of people like Shetty, riddled with financial challenges. In extreme cases, credit card debt is accompanied by human tragedy In October last year, a . 23-year-old woman living and working out of a village in "There is a lack of financial literacy in both rural and urban areas, and there’s also a significant gender divide." Shubhashis Gangopadhyay, founding dean of Indian School of Public Policy Gurgaon killed herself over persistent calls from a credit card company; the police had to register a case of abetment to suicide based on her farewell note. In 2019, a 35-year-old man jumped to his death with his fouryear-old daughter in Delhi over unresolved debt arising from a bunch of credit cards. SG (full name withheld on request) from Mumbai is still in credit limbo, continuing to grapple with debt that has been mounting since 2016. “Demonetisation hit me doubly – first, because I ran a cash flow-oriented business, an internet café, and the reduced cash in circulation meant fewer customers, and secondly because it was impossible for me to convert all the cash I had to new notes,” says SG. Like Shetty , whose business was impacted by the pandemic, he had no choice but to use his credit card for daily expenses. In a year, he had run up a debt of over `6 lakh. “I have been paying up as much as I can Kirankumar Shetty businessman each month, but it’s impossible to keep pace with the sky-high interest,” says SG, who also had to borrow `3 lakh against another card between the time he shut down his internet café in Andheri in 2017 and started earning a steady income by running a cloud kitchen in 2018. “I was just finding my footing, and then the pandemic hit, and the rug was pulled from under my feet,” says SG, who sold his apartment in Mumbai, paid off `13 lakhs of the `25-odd lakhs he still owes credit card companies, and moved to Nashik in February this year. His monthly expenses are taken care of by his maternal uncle who has found him a job in a factory but most of whatever he , earns continues to go towards paying off his debt, “and still, with the interest mounting, I don’t think I will ever be debt free,” says SG, who worries that should his aging mother require medical care, he may not be able to afford it. There’s hope yet. Freed, a debt resolution platform founded by Ritesh Srivastava, is one of the torchbearers. “Aside from financial solutions, I am very grateful for the emotional support they provided – the assurance made a world of difference,” says Shetty who stumbled across an advertisement for the platform when he was racking his brain for solutions. Guided by the team, he started setting aside a sum every month, diligently working towards a resolution, while they negotiated his debt down from `30-odd lakh to about `13 lakh, carving out a significant 43.77 per cent savings. Credit Rising Srivastava says he established Freed in 2020 in response to the changing dynamics of consumer debt in India involving the Turn to page 2