Personal Loan for Pensioners: Eligibility Criteria and Documents Required

June 21, 2022

Availing a personal loan with favorable terms in India as a young borrower with a stable income is not a big deal. However, if you are at the retirement age of 65 or above, you might find it a bit more difficult. This is because retired individuals often find it hard to keep up with their debt repayments, because of a lack of stable income. Therefore, most banks consider them to be a credit risk and often provide loans with higher interest rates or even reject the application.

However, there are some banks and financial institutions that provide loans to pension holders. But pensioners must adhere to certain eligibility requirements as dictated by banks to obtain the loan. 

In this blog, we will discuss the personal loan for pensioners eligibility criteria, benefits, features, documents required, and application process.

Personal Loan for Pensioners Overview

A personal loan can be obtained for meeting various financial needs such as medical emergencies, children’s marriage, consolidating previous debts, planning a vacation, home renovation, etc. 

A personal loan doesn’t require you to pledge any security or collateral, to obtain the loan amount. Many Indian banks like SBI, Tata Capital, Bajaj Finserv, Punjab National Bank, HDFC, Axis Bank, etc. provide personal loan options with competitive interest rates and flexible tenures which can go up to six years. 

The borrower will be required to repay the loan amount throughout the loan tenure in the form of EMI payments. The EMI amount is composed of a part of the principal amount and the interest amount accrued over the repayment period.

Moreover, the borrower has an option to prepay the loan amount after six months from the disbursement date, without any penalty or additional fee so as to avoid any additional repayment burden.

Top 5 Personal Loans for Pensioners in India

Following are the top 5 banks that offer personal loans for pensioners in India:

1. State Bank of India (SBI)

SBI is a government bank with the following features:

Loan Amount Up to Rs. 14 lakh
Interest Rate 9.75% – 10.25% p.a.
Loan Tenure Up to 84 months
Processing Fee 0.50% to 1% of the Sanctioned Loan Amount
Age at the time of full repayment 78 years
Prepayment Charges 3% on prepaid amount

2. Central Bank of India

Central Bank of India is a public sector bank with the following features:

Loan Amount 18 times the monthly pension, maximum Rs. 10 lakh
Interest Rate 8.45% p.a.
Loan Tenure Up to 84 months
Processing Fee NIL
Nature of Loan Demand loan and Overdraft with diminishing Drawing Power (DP) Limit to be amortized in 60 months
Co-borrower Pensioner’s spouse or legal heir(s) of the family pension beneficiary
Documentation Charges Rs. 500 + GST

3. Punjab National Bank (PNB)

Punjab National Bank is an Indian nationalized bank that offers personal loans to pension holders. Given below are some of the features of this loan product:

Minimum Loan Amount ₹ 25,000
Maximum Loan Amount ₹ 10 lakh or 18 times the net monthly pension of the pensioner (whichever is lower)
Interest Rate 9.25% per annum onwards
Documentation Charges ₹ 500 + GST
Processing Fee NIL

4. Tata Capital

Tata Capital Limited is one of the leading financial and investment service providers in India that falls under the top 5 providers of personal loans for pensioners in India. Tata Capital offers a seamless borrowing experience  with minimal paperwork and fast loan processing. Given below are some of the other features of this personal loan product:

Interest Rate 10.99% per annum onwards
Collateral No collaterals required
Repayment Tenure Up to 6 years
Processing Fee 2.75% on the sanctioned loan amount
Pre-payment Charges NIL (after 6 months EMIs are paid)

5. Bank of India

Bank of India is an Indian nationalized bank that offers a personal loan for pensioners with the following features:

Loan Amount Unsecured – 15 months of Net Pension (Gross Income Less Income Tax and EMI of other loans, if any) 

Secured:20 months of Net Pension

Interest Rate 9.35% per annum
Processing Fee 2.00% of the loan amount, 

Min. ₹ 500 & Max. ₹ 2,000 (No processing charges for senior citizens who are 60 and above)

Nature of Loan Term Loan, Demand Loan, Overdraft (reducible as per repayment schedule)

Features of Personal Loan for Pension Holders

Given below are some of the most significant characteristics of a personal loan for pensioners:

Interest Rate

The interest rate depends on various parameters such as the borrowed amount, bank’s policies, age of the borrower, security or collateral offered and more. Usually, pension loans have lower interest rates compared to regular personal loans. For instance, SBI offers personal loans with interest rates starting at 9.75% per annum. 

Security/Collateral

Since personal loans are types of unsecured loans, they don’t demand any security or collateral. Moreover, as they are provided to senior citizens withdrawing from a secure pension, additional collateral or security aren’t required. This is done in order to avoid any additional repayment burden on the borrower.

Eligibility Criteria

State and central government retired employees who receive a pension qualify for personal loans for pensioners. Some banks and financial institutions even provide personal loans to former private sector employees who receive a regular monthly pension. 

Further, spouses who receive family pension on behalf of their deceased spouse are also eligible for this loan.

Repayment Terms

Similar to any other personal loan, the repayment tenure for personal loans for pension holders varies from 12 to 60 months. The maximum loan tenure differs from one lender to another.  Further, the loan tenure can also depend on several other factors like the applicant’s age, credit history, income, etc.

Eligibility Criteria for Personal Loan for Pensioners

While the eligibility criteria differ for different types of banks offering personal loans, given below are some common criteria that must be met:

  • The loan holder must be an Indian citizen. 
  • The applicant must not be more than 76 years of age.
  • Your monthly pension must be less than ₹ 15,000 if you are availing of a loan from Tata Capital (the pension limit could be different for different banks). 
  • The CIBIL/credit score of the applicant should be over 750.

Documents Required for Personal Loan for Pensioners

A pension holder will be required to furnish a copy of the following documents to avail of a personal loan:

  • A duly filled personal loan application form for pensioners.
  • Income proof documents such as the latest salary slips.
  • Photo Identity Proof documents such as PAN Card, Aadhaar Card, Driver’s License, etc.
  • Address Proof documents such as Aadhaar Card, Passport, Driving License, etc.

Comparison Table of Personal Loans Offered by Top Banks and NBFCs

Banks/NBFCs Interest Rates (per annum)
Tata Capital 10.99% onwards
HDFC Bank 10.25% – 21%
ICICI Bank 10.50% – 19%
SBI 9.60% – 13.85%
PNB 7.90% – 14.50%
Kotak Mahindra Bank 10.25% onwards
IndusInd Bank 11.49% onwards
Axis Bank 10.25% p.a. onwards
Bajaj Finserv 13.00% onwards
IDFC First Bank 10.49% – 23%

How can I Apply for a Personal Loan for Pensioners in India?

You can always obtain this loan product by directly visiting any of the banks that offer personal loans for pensioners. All you have to do is, fill out the personal loan application form and submit it along with all the required documents. Once your documents are verified, the officials will approve your loan application within 2 working days

Alternatively, you can simply go to the bank’s official website, sign in and fill up the application form. Furnish all the required documents, and submit them. After your documents are verified and details are found valid, the bank will approve and sanction the loan within a few hours or working days.

Frequently Asked Questions (FAQs)

Is a personal loan available for pensioners?

Yes, there are a few banks and institutions that offer personal loans for pensioners as well. But they must qualify by certain criteria set by the institutions.

How much personal loan amount can a pensioner borrow?

Every bank has set a different minimum and maximum loan amount limit for pensioner loans. For instance, Tata Capital allows a maximum personal loan limit for pensioners of about ₹ 35 lakhs, while Fullerton offers a maximum loan amount of ₹ 25 lakhs.

Can a 65-year-old get a personal loan?

Yes, a 65-year-old can also avail of a personal loan provided that he/she is still earning or at least receiving a pension of a specified amount by the bank.

Can a 70-year-old man get a loan?

Yes, a 70-year-old man can also get a loan but he has to meet the eligibility criteria framed by the bank.

How can I pay the EMI for my pensioner's loan?

You can pay your EMI through Net Banking or by submitting a cheque or a demand draft in favour of the bank that issued the loan.

What is the repayment tenure offered for a personal loan for pensioners?

The repayment tenure varies from one bank to another. Usually, pensioners get a repayment period of 12 to 36 months for obtaining a personal loan.

For what reasons should I avail a personal loan for pensioners?

A pensioner can get a personal loan for different purposes such as a medical emergency, child’s marriage, planning vacations, buying a home, etc.

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Category:Personal Loan

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