The situation as it is now with halt in various business activities and job losses, many in India and world over might be facing financial stress. Though some countries have begun to reopen as the situation has improved there, talking about India the situation is both critical and uncertain.
Amid this uncertainty what has also come as a huge distress is banks unwilling stance to lend easy money. In a conversation with a friend who applied for a personal loan, he faced rejection on the following grounds:
1. His employee was not registered on the panel of the bank's exclusive list
2. His salary was less
3. And the same was not verified or supported by the employer's HR group.
4. Further if at all, all the listed above factors were good he would have secured a personal from a private lender at a huge 19 percent.
Note for some of the private lenders to secure a personal loan, the minimum salary threshold has been hiked to Rs. 40000 per month.
Now considering this we may also bring to light that in the Covid 19 pandemic arena:
Banks highly cautious when it comes to lending money:
As it is the banking sector in not so distant far will feel the heat of the rising non performance accounts which were given a break or relaxation as part of the moratorium last year that they should not be classified as NPAs. But now, they have no way to go but be more safe with their lending.
Documentation changes amid the pandemic for personal loans
Other than the usual salary slip that is to support that you are employed and can repay the borrowed money
Banks amid the pandemic have been asking for new documentation formalities such as:
1. A work from home(WFH) certificate issued by the employer.
2. Also the KYC is a definite need here with personal loan being an unsecured loan
Personal loan rates slashed for various banks amid the pandemic:
|Bank||Loan ticket size||Interest rate per annum|
|SBI||Up to Rs. 20 lakh||9.6-13.85%|
|Bank of Baroda||Rs. 50000 to Rs. 10 lakh||10-15.6%|
|PNB||Up to Rs. 10 lakh||8.95-14.5%|
|Union Bank||Up to Rs. 15 lakh||8.9-13%|
|HDFC Bank||Rs. 50000 to Rs. 40 lakh||10.5-21%|
|ICICI Bank||Up to Rs. 25 lakh||10.5-19%|
|Axis Bank||Rs. 50000 to Rs. 15 lakh||10.49-21%|
|IndusInd Bank||Rs. 50000 to Rs. 15 lakh||Starts at 11%|
|HSBC Bank||Up to Rs. 30 lakh||9.99-14%|
|Kotak Mahindra Bank||Up to Rs. 20 lakh||10.75-24%|
|Bajaj Finserv||Up to Rs. 25 lakh||13.00%|
Now to get the best deal on a personal loan, your relationship with the bank, your credit worthiness, credit history, credit profile as well as your current earnings and future earning prospects all come into picture.
So, until and unless you have an handsome earning that draw you a minimum of say Rs. 50K per month, forgot about personal loans for now and may be scout for another fund raising ways.