Get Rs.10000 Personal Loan for 45 Days @ZERO Interest from ICICI Bank

The money earned through interest income makes your bank rich be it through credit card, personal loan, home loan, car loan, etc. And the most painful is the interest paid on personal loan, which is a money minting machine for all the lenders, irrespective of the amount of credit granted. Because the interest rate charged by the bank is huge, especially when the loan is taken without any collateral. And if the borrower takes credit against collateral then the rate charged is on a lesser side. In any case, personal loan is the most expensive.

Understanding the pain caused, ICICI bank (India’s largest private sector bank) in partnership with Paytm (India’s largest mobile payment app) is offering digital credit (i.e. personal loan), which is interest free, to its customers using Paytm app. This is basically a short term small loan.

The product is called Paytm-ICICI Bank Postpaid

Loan is not granted to everyone. Real time credit behavior i.e. financial and digital behavior is assessed based on which credit is approved within seconds. Here are more details on the digital personal loan (or credit):

  • Minimum loan amount: Rs. 3,000
  • Maximum loan amount (digital credit): Rs. 10,000
  • Interest rate: ZERO interest for 45 days
  • No documentation
  • Instant approval
  • No processing, pre-closure charges

What if repayment is not done within 45 days?

The penalty is very small i.e. a late fee of Rs. 50 will be charged and interest rate of 3% will be applied. Repayment can be done through Paytm wallet, debit card, or internet banking of third party bank.

Eligibility criteria but not limited to:

  • He/she should be ICICI Bank Customer
  • Must be using Paytm App for shopping
  • Paytm app should be linked to ICICI Bank account
  • Should have good credit score

Where can you use the money?

There is no condition on the using the credit money. Borrower is free to use money for any purpose such as making bill payments, flight booking, buying movie ticket, and so on.

Who should use such credit facility, if eligible?

  • First time applicants with no credit history
  • This is best recommended for individuals (especially salaried) who want to pay their utility bill in the first 5 days of the month but are receiving salary late. Once they receive the salary, repay the loan.
  • Small business owner or self-employed: There are many businesses in India which still run on credit mode i.e. date of receiving money is not fixed. However such individuals have to pay various bills in the first week of the month in order to keep the business running. So for such individuals, this zero interest loan is worth recommended.
  • It is also ideal for shoppers who want to earn cashbacks

How to avail more credit?

It’s simple. Make repayment on time and fully and you can avail loan amount of upto Rs. 20, 000.
In case of default, the loss would be for the ICICI bank and not Paytm.

9 Types of Collateral to Get Personal Loan: FD, Shares, MF, Gold, NSC, KVP & more

Financial emergencies can strike anytime. And not everytime your own savings or friends can come to fulfill your requirement. In such cases, personal loan is the best and the only solution.

When any individuals want to take personal loan from any financial institution for his/her financial requirement, there are two options:

  • Against Collateral
  • Without Collateral

Collateral means pledging your assets/belongings as a security with the lender and get finance against them. Getting a personal loan without collateral is expensive for the borrower because of high interest as the risk is high for the lender.

Opposite is the case when taking loan against collateral. The interest rate is low and so is the risk to the lender. Most importantly, the credit score is not an eligibility criteria in most cases and the processing is quick compared to overdraft without collateral.

There are many types of collateral’s lenders accept in India. And here is the list of collateral’s borrower can pledge and get personal loan against them:

Fixed Deposit: If an individual has fixed deposit account in his/her name, then you can get personal loan against FD. The loan amount is around 80%-85% of the FD amount kept with the bank. Important point to note is, you cannot get loan whose tenure is greater than the FD tenure. The interest rate charged by the bank is higher than the FD interest rate offered but lower than the traditionally bought personal loan.

Shares: These are also called as loan against securities. If you are an equity investor then you can pledge your shares with the bank and get overdraft loan against it. The loan amount depends on which scrip it is, the previous day’s market value of the shares and the quantity held. Interest is typically charged on the amount utilized and for the time span utilized. You can take loan against a single scrip although most banks ask for shares from two different companies. Every bank has pre-approved scrips against which loan is given. Also loan is not granted if the applicant has shares in physical form, in the name of minor, locked-in, partly paid-up shares.

Mutual Fund: Similar to personal loan against equities, you can pledge mutual fund units and get finance against it. You cannot get loan against every fund you own and every bank has pre-approved funds against which overdraft is given. Applicant can have shares and MF units held in NSDL or CDSL. The loan amount is higher for Equity/ Hybrid/ ETF funds and lower for debt or FMP funds. The net asset value (NAV) is used for calculating the loan amount.

Property: Although taking a loan against property is not recommended, but those who are seeking to get it must know that – loan can be taken by mortgaging residential, commercial property (office or plots), or residential plots, schools, hospitals, etc or industrial property. Loan amount (typically 60%-70% of the value of the property) depends on the net present value of the mentioned property. If the said property is jointly held, then all the co-owners are required to become co-applicants of the loan. Mortgaging your property doesn’t mean, you cannot continue using it. You have full rights to use the property.

LIC Policy: The loan amount depends on the surrender value of the policy and is typically 85% – 90% of the surrender value. Most importantly, the borrower should have paid three premiums at the time of loan application. If the loan repayment is not done before the maturity of the policy, then LIC has the rights to get their money back from the maturity amount.

Gold: These are also called as gold loan and the borrower has to deposit gold ornaments with the lender and get finance against it. However the gold remains in the custody of the lender until the loan amount is paid fully. Which means, you cannot enjoy wearing your ornaments. In return, bank guarantees safety for your gold jewelry. The loan amount mainly depends on the carat (18 to 24) and weight of the gold jewelry in grams, tenure of the loan. You can also get loan against gold coin.

Credit Card: Another option to save money on higher interest rate charged and get instant cash, is personal loan against credit card. There is no application required as this type of loan is already pre-approved and typically existing card holders are offered this type of loan. The loan amount in this pre-qualified loan is within the credit limit. However the applicants must have a good repayment history and credit score.

Other types of assets against which you can get personal loan are:

National Savings Certificate and Kisan Vikas Patra: For meeting financial requirements, you can also get loan against NSC or Kisan Vikas Patra (KVP). The loan amount depends on the age of NSC/KVP. Note that NSC/KVP should be on the name of the borrower.

Almost all leading banks in India – SBI, ICICI Bank, HDFC Bank, Axis Bank, etc. and other financial services provider such as Bajaj Finserv, Tata Capital and others offer loan against above mentioned collaterals. And all credit is granted at the sole discretion of the respective Bank or financial services provider and eligibility criteria is different for each lender which mainly include age, income, past financial transaction history, and number of dependents.

4 Ways to Get COLLATERAL FREE Loan for Salaried, Self Employed Business

In India, there are two types of loans – secured and unsecured.

The key differences between the two are – secured loan requires some form of collateral to be kept under possession of the lender (car, land, fixed deposit, etc.) and interest rate is low and risk to lender is high. Whereas in case of unsecured loan, there is no need of collateral or guarantor, interest rate is high and risk of lender is also high. Collateral free loans are given on the basis of TRUST. Borrower is trustworthy or not is decided on the basis of previous borrowing history and current financial status.

Whenever any individual applies for personal loan, guarantor/collateral is typically requested by the lender. In either case, credit score and employment or business status will determine whether loan would be approved or rejected.

Not everyone has collateral to keep in the custody of the lender. So in case of urgency, how to get loans with no collateral in India?

There are four ways to get collateral free loan as follows:

Direct application with the financial institution

Individual can visit the lender directly or apply online. Borrower will have to apply for multiple documents such as income proof, IT returns, employment documents such as salary slip, etc. And based on statistical calculations and credit score, the application will be either rejected or approved. Although individuals with higher income get loan easily, there are loans for low income earners as well, offered by few banks. In such cases, the finance offered is on a lower side.

On the other hand secured loans are easy to get and interest rate is also low. This is because the risk is low since your valuables are in the possession of the lender. And in case of default, lender has rights to take possession of the assets – car, home, land, gold, equities, mutual fund, etc.

Mudra Loan

Micro Units Development & Refinance Agency Ltd. (MUDRA) is a scheme run by government of India. Under Pradhan Mantri Mudra Yojana (PMMY), individual who wants to set up/run micro units – manufacturing, trading and service sector business is eligible to get upto Rs. 10 lakh credit. This loan cannot be granted to a salaried individual and only those who want to setup or run business can be offered the credit. As the name suggests, Mudra loan can be availed only if the borrower is having micro business i.e. where capital requirement is small.

The objective of PMMY is to promote entrepreneurship in India. Under this scheme, there are three categories of loans:

  • SHISHU – Maximum credit of Rs. 50, 000
  • KISHORE – Maximum loan of Rs. 5 lakh
  • TARUN – Maximum loan of Rs. 10 lakh

Peer to Peer Lending

These are online loan marketplaces connects borrowers with multiple lenders. Compared to banks, the eligibility criteria are not very strict and there is no requirement for guarantor or any type of collateral. And borrower has options to choose from various lenders and bargain on interest rates. Until August 2017, they were not regulated by RBI but from September 2017 onwards, RBI decided to regulate it.

P2P platforms check eligibility of the borrowers via credit score check, income, social media activities, and others.

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

Businessmen owning micro / small manufacturing, service company, or wanting to setup micro small enterprise (MSE) are offered collateral free loans. The loan amount is upto Rs. 1 Crore. The cash credit can be used by the borrower for working capital, buying assets or expanding the business. In order to be eligible to get loan under CGTMSE scheme, the entity should be either of these – Sole Proprietorship, Partnership Firms, Private or public limited Companies.

Loan for Low Income Earners against FD: Min. Amount 10,000

There are multiple ways to get personal loan in India and amongst all the most convenient option is to invest in fixed deposit and get personal loan against the FD.

This option may not be suitable for everyone. But for low income earners, personal loan against fixed deposit is the best solution. Reason is when a poor income earner, applies for an overdraft loan via traditional way i.e. application and then awaiting for the lender’s reply is time consuming and at the same the result in most of the cases is not satisfactory.

This is because the eligibility criteria for loan are very stringent and applicant has to meet following two main conditions:

  • Income – The most important criteria checked worldwide including India. There is a minimum annual income required to get a loan.
  • CIBIL score – In order to evaluate credit worthiness of the borrower, banks do a rigorous verification check via CIBIL, India’s credit rating agency. Banks get access to the borrower’s past financial transaction history and based on that they calculate the CIBIL score (out of 900). If the score is above the minimum threshold, then applicant has a good chance of loan approval otherwise not.

There are many other conditions such as address proof, employer status, type of job etc. However the above two eligibility criteria are always checked.

But in case of poor earning person – salaried or self-employed; getting a loan becomes difficult because of the first condition i.e. income. Although there are banks offering personal loan to low income earners (requiring monthly income starting from a minimum Rs. 5000), there are denial possibilities because of inability of meeting other eligibility criteria.

Other option is to get loan from co-operative banks having less stricter eligibility norms.

Therefore taking overdraft against FD is most convenient as there are multiple benefits as follows:

  • No income criteria
  • Fast loan disbursal
  • No CIBIL check
  • Minimum documentation
  • Low interest rate compared to traditionally taken loan and few others
  • No prepayment penalty
  • Low processing fee. Some banks do not even charge this fee.
  • Borrower can use the fund for any purpose

Here is the table showing minimum loan amount offered by various banks against fixed deposit:

Financial InstitutionMinimum Loan Amount (Rs.)
Axis Bank25,000
ICICI Bank10,000
State Bank of India25,000
Bajaj Finserv25,000
Kotak Mahindra Bank25,000
Bank of Baroda1,00,000

Few points to take a note of when thinking of taking overdraft facility against FD:

  • You can borrow after a certain period of opening FD account. Typically 3 months is the minimum period.
  • There is no standard tenure of taking loan. However it should not be more than the FD tenure.
  • You cannot borrow more than the FD amount. Typically 80% – 90% of the deposit amount can be granted.
  • Interest is charged only the amount drawn and not on the entire amount kept in FD.
  • If you fail to repay the dues, bank has authority to recover from the FD.

6 Ways to Get Personal Loan with No Income Proof

Digitization has made the process of borrowing money extremely easy. In fact, many lenders claim to approve the loan within hours of application. However there are terms and conditions involved and most important being the income and proof. Every commercial lender will first ask the applicant for the annual income and then ask proof verifying the income – salary slip and income tax return statement.

The reason why income is most important criteria is because credit worthiness of the applicant is evaluated on this basis. There is no other way to evaluate the risk associated with the applicant apart from credit history check, which is not a full proof method.

However not every employer in India provides pay slip at the end of every month due to whatsoever reasons. Or many companies pay salary in cash or cheque. But this creates problem for following category of loan applicant employee when he/she applies for the loan:

  • Salary is paid in cash with no proof showing that it is paid by the company you work for.
  • Salary is paid via cheque but no pay slip is given.
  • Self-employed – earning irregular income with no income tax paid.
  • First time in job
  • Homemaker

So can such individuals get personal loan with no income proof?

Answer is YES. Getting loan is possible (though difficult) with no income documents available.

Here are the options to meet the money requirement:

Ask friends or relatives: One of the best and most widely used alternative to get money at the time of need. This option of borrowing money works completely on trust. What best you can do is give interest to your acquaintance (lower than what a bank charges) in addition to the borrowed money. So borrowing money actually becomes a personal loan. Borrower will be happy as he/she would get more money in return. And in future, can provide you more money, at the time of urgency. Basically mutual trust will further strengthen.

Joint loan: If above solution does not work, then you can request other person to apply for a joint loan (assuming the other person is eligible to get loan). The loan will be on his name. And loan repayment responsibility will be completely on your shoulder. Again this option works on trust. It is similar to supplementary credit card.

Against fixed deposit: One of the best recommended option to get personal loan with no income proof or if applicant is self-employed or student or homemaker, is loan against FD. It is a secured loan, where applicant must have FD account with the bank. And the loan amount is dependent on the money kept in the account. Typically 80%-90% of FD amount is given as the loan amount. This option has multiple benefits such as no pre-payment charges, low interest rate; but 1%-2% higher than the interest offered on the FD amount, interest charged on the used amount and not the whole amount. If you can show healthy balance in your bank account then lenders will automatically offer pre-approved loan by asking you to get loan against fixed deposit.

Private money lenders: This is the least recommended option to get loan due to two main reasons – very high interest rate and bad recovery process. If you are using this option to get a loan, then check out this article containing information on pros and cons involved in private money lenders.

Co-operative banks: Commercial banks (e.g. ICICI, Axis, HDFC & others) will always ask for pay slip to verify the income. However commercial banks have less stricter norms and they do not ask for income documents. In order to get loan, you need to be a member of the bank along with other terms.

Peer to peer lenders: These online marketplaces for loan are other option to explore to get personal loan. You can bargain for interest rate and the eligibility criteria are less strict compared to commercial banks and not everytime you will be asked to produce income documents.

How to convince lenders to provide personal loan when no documents are available?

If you are a genuine applicant and income documents such as salary slip is not available, then you can request lenders by providing following additional documents which will add more weightage to your personal loan application.

Employment offer letter: Even though your company does not offer salary slip, employment offer letter showing currently drawn income may help in some way.

Income proof from previous job: If you had been working earlier where salary slip was given regularly, then keep it handy and submit as a proof. And along with that, you can show offer letter of the current employer showing your salary. Typically, when you switch jobs, income also increases.

Bank statement: To further support above two documents, bank statement showing income from your employer can also be helpful. Statement showing money deposited in your bank account on a specific date of the month is an excellent income proof.

Photocopy of cheque: Many organizations pay salary to their employees via cheque. One of the first thing to do when you receive cheque is to take photocopy and snapshot of the same and then deposit the money in the bank account. Photocopy of cheque is also a good income proof.

Although these documents are not a replacement, but your application will definitely be considered for a review.

Personal Loan against FD: 7 Reasons to Apply

Emergency money requirement can be fulfilled through various options such as personal savings, lending money from relatives or friends, using credit card. But if these options do not fulfill the emergency money demand, then taking personal loan is the best option. You can get personal loan from financial institutions such as banks/financial service companies and others or peer to peer lenders or private money lenders.

Not many of us are aware that banks offer multiple options to take personal loan and one of the option is personal loan against fixed deposit, which is nothing but a secured loan in which you pledge your FD account as a security.

But when should someone choose for this type of loan. Listed below are the reasons when to prefer loan against term deposit.

Low CIBIL score: An individual who defaults monthly EMIs consistently or over-crosses the credit limit or does not pay the EMI fully is more likely to have a low CIBIL score. So in future, whenever they apply for personal loan, chances of rejection are very high. Such individuals are risky for any lender as they are predicted to default in the future as well and turn out loss making for a financial institution.

Although a default can be due to many reasons such as job loss, other emergency or financial instability etc. but banks do not care about this. They want their money back along with the interest applied (as high as possible). So for such individuals, personal loan against fixed deposit is the most recommended option. There is no credit history check and neither the banks will ask for any income proof.

Loan rejected: If someone applies for a regular personal loan but faces rejection due to whatsoever reason, then applying for a loan against FD is a better alternative. The success rate is quite high and eligibility criteria are not very stricter compared to a normal personal loan.

Loan amount required is small: One of the biggest difference between personal loan against FD and regular loan is that the interest rate charged is very high in case of normal personal loan. E.g. if you take personal loan of Rs. 3, 00,000 then interest charged would be between 16%-20% whereas in case of FD, interest would be 4% – 5% less but higher than 2%-3% of the interest received on FD. So loan against FD should be preferred over normal one, if the loan amount is small, as you will save money on interest. But remember that, you can get higher loan amount in case of FD, only when the investment in fixed deposit account is very high. This is typically not the case i.e. investing huge sum of money in FD is not a recommended investment avenue.

For short term: If someone wants money for short term and is ready to close the loan within a short time period, then choose for loan against term deposit. Early closure of a regular loan will result in pre-closure charge which is not the case in overdraft loan. You can close it anytime and there won’t be any charges.

No CIBIL score: Lenders first check CIBIL score and then take decision on approval or rejection. Individuals with no credit history will naturally have no credit score. And lenders have no way to judge their financial history and evaluate credit worthiness. Typically individuals fitting in such categories are students, housewives, recent graduate with no job at present. Such individuals can choose for taking loan against FD. Of course they will need to money to open FD account, which they can do by using their own savings or asking their friends or relatives.

Additional reading: Various 8 options to get personal loan when you have no or low CIBIL score.

Save money: Other reason loan against FD is recommended is that it is a money saver. When someone applies for and receives personal loan then there is a processing fee applied. But in case of loan against FD, there is no processing fee and also very few banks charge a prepayment penalty which is always charged in a normal loan.

No salary slip or income proof: Lenders always ask for income proof for evaluating the repayment capacity of the applicant. However not everyone gets income proof or salary slip from their employers or file IT returns. So such individuals can choose term deposit loan which requires no income proof documents or tax proof.

14 Differences: Personal Loan Vs. Overdraft Against Fixed Deposit

There are multiple options to get personal loan in India each different from the other. The options are as follows:

  • Regular personal loan
  • Loan against fixed deposit
  • Loan against shares or mutual fund
  • Loan against LIC policy and others

And in this article, we’ll compare two most widely used options: regular personal loan and overdraft against fixed deposit (or loan against term deposit).

Type of loan (secured and unsecured):

Money kept in FD acts as a security when taking loan against it. So this is a secured type of loan. Whereas personal loan is an unsecured loan since borrower does not have to keep any type of security with the bank.

Application process:

In case of conventional loan, banks follow a lengthy and time consuming process before granting the approval. This includes filling application form, verification of address, income, employment details by the banks, and few others. But in case of overdraft loan, there is no need of address verification as banks already have this detail. Moreover income or IT return proof is not mandatory in case of overdraft loan. As most of the other details are already with the bank, no re-verification is required.

Processing time:

FD loan is processed at a faster pace compared to regular loan which is more time consuming.

Loan amount:

There are multiple criteria taken into consideration when loan amount is decided. But the two main criteria in case of personal loan are – income/salary and CIBIL score. But in case of overdraft loan, amount is dependent on the fixed deposit amount kept with the financial institution. So you can get high loan amount in case of personal loan but not in case of OD loan.


In case of regular personal loan, financiers ask for various documents such as income proof, bank statement, IT returns, address proof, ID proof etc. in addition to the application form. In comparison, when you take loan against term deposit, very less documents are required. This includes pledge/lien letter, deposit receipt/certificate, and few others.

Must read: Consequences of submitting fake income documents for personal loan.

Interest rate:

Higher rate is charged by the bank when granting a regular personal loan and is typically 16% minimum to as high as 24%. But in case of personal loan against fixed deposit the rates are lower but minimum 2% higher than the interest offered on FD. So FD offering a 9% interest can offer loan at 11% which is lower than a normal loan. The reason for high interest is that, a conventional loan is an unsecured loan i.e. financial institutions do not demand pledging any security. So the risk of granting money remains high till its closure. But overdraft loan is a secured loan in which FD acts a security with the bank.

Interest calculation:

When you take term deposit loan, the interest is applied only on the balance loan amount and not on the entire FD amount kept with the bank. In case of traditional loan, interest is applied on the entire loan amount and other factors such as tenure, credit score of the borrower, etc. is taken into consideration.

No credit score check:

Whenever a loan or credit card application is made, banks contact credit bureau (CIBIL) and verify the financial history of the borrower. This process is very important and helps banks in evaluating whether the applicant is credit worthy or not, based on the credit score calculated for the applicant. But while applying for personal loan against fixed deposit, there is no credit bureau check because FD is a security kept with the bank.

Additional reading: Tips on getting personal loan when you don’t have salary slip.

Eligibility criteria:

Anyone aged above 18 years can apply for a loan. But only an individual with FD account on his/her name can apply for loan against FD.

Processing fee:

Every loan application involves human efforts, this is the one of the reason banks charge processing fee. But in case of overdraft loan there is no processing fee charged by many of the banks e.g. SBI and Federal bank. But there are some banks (e.g. Axis bank) who charge a very nominal fee.

No prepayment penalty:

Higher the loan tenure, higher would be the interest earned by the bank and so would be their profitability and vice versa. There is a pre-penalty fee applied if borrower wants to make payment before the standard period and close the account early. This fee is not applied when you want to close the overdraft loan prematurely. For e.g. if the loan tenure is 3 years and borrower wants to close the loan account within 1 year then banks will be at loss because they will not be able to make money, as interest income will stop. This is not the case when taking loan against term deposit, there is no pre-closure charge applied.

Loan application timeframe:

You can apply for personal loan anytime. But against FD, you can apply only minimum 3 months after opening the fixed deposit account.

No need to specify the reason for loan:

While personal loan requires the applicant to specify the reason, the same is not asked when taking personal loan against fixed deposit. So you can use money for any purpose such as travel, buying a vehicle, house renovation etc.

Recovery process:

If you default on loan against FD then bank has right to seize the FD account and recover money. But in case of traditionally granted personal loan, consequences are worst if default continues for a long period. Since the financial institution does not have any borrower’s asset kept as a security, they have nothing to seize. So in such situations banks employ recovery agents or in-house collection department, whose job is to recover money from the defaulting borrower by taking control of their personal assets, calling or personally visiting the house and other means, as per the law.

5 Ways to Get Personal Loan for Employee of Proprietorship Company

In an event of emergency, the most sought option to arrange money is personal loan provided all other alternatives such as own savings or help from acquaintances fail to meet the requirement.

However before granting loan; lenders first check the income and the employer’s credibility. If the applicant works in a big company (public or private limited) and meets all other criteria including CIBIL score, salary etc. then approval is quick.

However if someone works in a proprietor firm then it becomes a challenge to get finance. This is because lender also check the credibility of the company applicant works for. Since in a proprietorship company ownership is held by a single person, so risks such as sustainability, turnover etc. always exists. For e.g. if anything unfortunate happens to the proprietor, then the whole business may come to standstill and there will be uncertainty in the job of employees i.e. company may shut down or workers will not get salary and so on. And in such cases, if any employee is granted a personal loan then repayment will become difficult due to no income.

Although there are loans which you can get by keeping securities as collateral with the bank. We would be discussing such financing options in this article.

So how can employee of proprietorship firm get personal loan? There are few solutions as follows:

High income: If the applicant works in a proprietor run company but earns good income which is higher than required by the lender then he/she has higher chance of finance approval. In addition to this, if the company is into business for a long time and profitable too then also the chances of getting personal loan increases. Salary slip and bank statement as required by the lender will help to prove the income.

Against fixed deposit: If the borrower has FD account with the bank then he can get personal loan against this FD at a lower interest rate with minimal documentation. Most importantly lender won’t check the employer’s credibility. This type of a loan is secured as the FD is pledged with the bank. And applicant will get loan amount which is 80% – 90% of the FD amount.

Against securities: Employee from proprietorship firm can also get personal loan by keeping LIC policy, gold, mutual fund, ETF, and savings bonds as a security with the bank. Calculation of the loan amount varies with each financier. Some may have a cap on the amount while others may lend money depending on the market value of the pledged security.

Peer lenders: If all of the above solutions fail then individual working at proprietorship company can apply for personal loan at peer to peer online loan marketplaces. Borrower gets an option to choose the investors (basically money lenders) and at the same time bargain for interest rate. Although every P2PL company has its own eligibility criteria, applicant has vast options to choose a lender. Also called as PTPL, these marketplaces are secured way of getting personal loan and charges are very less compared to banks.

Private money lenders: This option is mentioned but should be avoided as much as possible. Because they take control of your assets such as property or gold or any other till the complete repayment is done. And there are cases of fraudulent activities conducted by these lenders of forging the documents and taking control of the assets. Negative sides of getting personal loan from them is that interest rate charged is very high and recovery process is very bad. Ofcourse there are few benefits such as no credit history check, quick disbursal of money, flexi-repayment option, etc.

Check out pros and cons of private money lenders.

So as mentioned above there are multiple options for employee of a proprietor owned company to get personal loan. Remember to payback all the EMI on time and fully which will help in getting a good CIBIL score.

Personal Loan for Proprietor: 6 Options to Get Financing

There are many kinds of business entities in India categorized as private limited, public limited and one person company also called as proprietor firm. Every business owner requires working capital to run their business or for personal use and most rely on taking loan. In case of proprietor based firms, single individual is the owner of the business establishment and has legal rights to own the assets and manage each and every operation.

For a proprietor, arranging money to keep the company functional is difficult as they have to mostly rely on their own money. And due to the risk associated with the business, since dependability is on one individual, lender takes cautious approach to offer loan. Banks do not want to bear a loss if such individual defaults.

So how to get personal loan if you are a proprietor? And who offers financing to the owner of such firms?

Firstly owner will have to get loan on his/her individual capacity since it is an unsecured loan. If you want financing for setting and running small manufacturing plant, service company etc. then there are multiple options to get loan to meet the requirement as follows:

Government loan (Mudra loan): Pradhan Mantri Mudra Yojana, an initiative by the Government of India offers finance to – manufacturing, trading and service sector units in rural and urban areas. These loans are offered by public, private, regional rural, urban co-operative banks, state-co-operative banks, micro finance institutions, non-banking finance companies in collaboration with the government.

Financing below Rs. 10 lakh are offered under Mudra loans and borrower needs to apply at the local branches of these financiers. Then the application will be reviewed and further processing will take place.

Micro finance companies: There are many such companies sanctioning the loan amount on the basis of just the income generating capacity of the borrower, management quality, cash flow, etc. Although micro enterprise gets small loan amount, proprietor or owner of such firms has a good chance to get loan to start or run the business. Every micro finance institution has their own eligibility criteria. For e.g. L&T Microfinance offers loans only to women borrowers, Agora finance offers loans only when applicant produces 2 guarantors amongst other criteria.

Against fixed deposit: If proprietor has FD account with the bank, then he/she can take personal loan against FD. The loan amount in this case is typically 80%-90% of the FD amount kept with the bank. Interest rate is also low as borrower is pledging FD as a security with the bank and most of the banks do not charge extra for prepayment closure. Almost every bank in India offers such kind of financing. Your FD investment remains intact.

Against securities: Another way to get personal loan for proprietor is by pledging securities such as mutual fund, equities, life insurance policy, exchange traded funds and savings bonds. Loan amount in this case is calculated depending on the type of the security kept. For e.g. in case of mutual fund/shares; loan amount is 50% of the current value. If you pledge insurance policy or bonds then there is a minimum and maximum amount cap which differs for each bank.

Against property: Another option for a proprietor to meet personal or business goal is by taking loan against property (commercial or residential or land). Property is kept as collateral with the bank. Instead of selling and arranging money, proprietor can mortgage property get personal loan against it. If tenure is short term then such loan should be taken. The cost of loan is low due to lower interest and amount which is nearly 50%-60% of the property value is given. And during the tenure of the loan, property cannot be sold/rented.

Loan from banks: This is a traditional option for a proprietor to apply for a personal loan at a bank. However lender may be hesitant to approve the loan because of the risks involved as there is no security or guarantor. This is the reason lenders have strict eligibility criteria before processing such applications. For e.g. ICICI Bank offers personal loan to proprietorship firm but with following eligibility criteria:

Minimum turnover of Rs. 40, 00,000 for non-professionals
Minimum profit after tax should be Rs. 2, 00,000 for proprietor firm

Likewise every bank has its own criteria for approval.

Remember, if loan application is completely genuine, business is conducted with fair practice, honestly, with complete transparency, and proprietor has a good credit history with excellent repayment history (if any) then there is always a good chance to get loan.

19 Banks offering Personal Loan to Bank Staff (Retired Pensioner)

Retired bank personnel (or pensioners) require money for meeting basic necessities during their golden years. Bank employees especially from government organizations make some kind of investments during their working career so that they get sufficient corpus in order to meet basic necessities. In addition to this, many individuals receive pension after their retirement.

However the corpus may not be sufficient if any emergency arises. Either they will have to use their personal savings or ask money to their children or acquaintances.

In such situations, personal loan for bank employee is a good alternative to get money and meet the necessities.

However any lender would first ask for income to evaluate credit worthiness and calculate loan amount that can be granted. Assuming post retirement, individual does not have income getting a loan is difficult and also the age factor can create hindrance. Most banks have a maximum age limit which is typically 60 years.

So how can bank employee get personal loan? There are many banks offering personal loan to pensioners (i.e. who are drawing pension from the banks where they were working). This also includes retired bank employees. The table below also shows age limit and loan quantum of the pension holder.

Name of Bank or FinancierAge Limit (at the date of maturity of the loan)Maximum Loan AmountRepayment Term
Union Bank of IndiaAbove 70 years allowed2 lakh3 Years
Canara BankAbove 65 years allowed4 lakh5 years
Syndicate BankOver 70 years1.50 lakh6 years
Indian Bank78 years6 lakh5 years
Andhra BankNA4 months pension5 years
Bank of IndiaAbove 75 years allowed1 lakh5 years
Allahabad BankAbove 65 years allowed1 lakh4 years
Punjab National BankAbove 75 years allowed7.50 lakh2 years
Dena BankMax. 80 years1.50 lakh3 Years
Oriental Bank of CommerceMax. 75 years5 lakhNA
Central Bank of IndiaAbove 75 years allowed2 lakhNA
United BankMax. 75 years10 LakhNA
Tamilnad Mercantile BankNAUpto 95% of one month pensionNA
Bank of MaharashtraUpto 73 years3 lakh5 years
IDBI Bank75 years5 lakh5 years
Vijaya BankMax. 72 years2 lakh5 years
South Indian BankUpto 55 years25 lakh15 years
UCO BankNA4 lakh3 Years
Corporation BankNAUpto 10 months NET Pension5 years

In the above table; age shows the maximum age on which loan matures.

Other options to get loan are:

Personal loan against fixed deposit: If retired bank personnel has fixed deposit account in the bank then he/she can get personal loan against FD. The quantum of the loan amount is typically 80%-85% of the amount kept in the account. The biggest benefit is that interest rate is low.

Against securities: Personal loan against mutual fund, gold, shares, insurance policy is another cheaper option to get loan. Borrower will have to pledge any of these assets with the lender and get loan against it. Since this is a secured loan, the interest rate is low.

Peer to peer lenders: Another emerging option to get loan is from peer to peer lending (P2PL) companies. Their eligibility criteria are different than banks.

Features of personal loan given to pensioners (including bank employees):

  • No processing fee by most of the banks
  • Loan amount is small since risk is high for the lender
  • Loan can be used for any purpose
  • Age criteria is relaxed compared to private banks such as ICICI, HDFC and others who have strict limitation
  • Not all banks ask for guarantor or security

From where should bank employee get personal loan?

Bank staff should keep in mind that more the money saved in their golden years, better would be the life. So first thing to do in order to meet emergency requirement is use own saving as much as possible and then take personal loan for the remaining amount required.

Always go for low interest loan. One way is to get personal loan against fixed deposit or securities. These loans are offered at lower interest rate compared to traditionally applied loans.