For high salaried individuals getting a credit card or any type of loan (personal, car, home and others) is very easy as their repayment capacity is good due to their income. Individuals from this category are typically the target customers of banks and financial institutions who are ready to offer them loan/credit card. But what about individuals with low salary? Can they get personal loan in case of any emergency such as hospitalization, marriage and others?
The answer is YES and it’s a myth that loans are granted only to high income earners. Personal loan for low income earners with salary as low as Rs. 5,000 are available in the market. Eligibility criteria apart from the salary are: age, credit score, company worked for, work city, years staying in the current address. Also check out credit cards for poor income earners.
Listed in the below table are the personal loan and monthly salary requirement of various Indian banks along with the interest rate applicable. Note that, GST rates are now applied on various financial services. So borrower will have to shell out more money.
|Lender||Minimum Net Monthly Income Required||Age Limit||Annual Interest Rate||Loan Amount Limit|
|The West Bengal State Co-operative Bank Ltd.||Rs. 2,000||21-60 Years||NA||Rs. 25,000 to Rs. 1,00,000|
|The Andaman and Nicobar State Co-operative Bank Ltd.||Rs. 5,000||21-60 Years||NA||Upto Rs. 2,00,000|
|The National Co-operative Bank Ltd.||Rs. 5,000||21-60 Years||16% - 18%||Rs. 25,000|
|City Union Bank (Consumer Loan)||Rs. 5,000||21-60 Years||16%||Rs. 50,000|
|State Bank of India (Xpress Credit Personal Loan)||Rs. 7,500. This loan is only for the employees of state and government, PSUs, selected companies||21-58 years||13.35%||Rs. 24,000 to Rs. 15,00,000|
|Abhyudaya Co-operative Bank||Rs. 8,000||21-60 Years||13%||Rs. 5,00,000|
|The Greater Bombay Co-operative Bank Ltd.||Rs. 10,000||21-60 Years||14.50%||Rs. 2,00,000|
|Canara Bank||Rs. 10,000||21-58 years||14.00% to 15.00%||Rs. 3,00,000|
|State Bank of India||Rs. 10,000 (rural/semi-urban)||21-58 years||13.35%||Upto Rs. 10,00,000|
|HDFC Bank||Rs. 15,000 (for individuals from Mumbai, Delhi, Bangalore, Chennai, Hyderabad, Pune, Calcutta, Ahmedabad, Cochin)||21-60 Years||15.75% to 20%||Rs. 15,000|
|ICICI Bank||Rs.17,500||23-58 years||11.99% to 20.00%||Rs. 50,000 to Rs. 15,00,000|
|ICICI Bank||Rs. 25,000 (for individuals from Mumbai & Delhi)||23-58 years||11.99% to 20.00%||Rs. 50,000 to Rs. 15,00,000|
|ICICI Bank||Rs. 15,000 (for individuals from Bangalore, Chennai, Hyderabad, Pune, Kolkata)||23-58 years||11.99% to 20.00%||Rs. 50,000 to Rs. 15,00,000|
|ICICI Bank (Privelege Banking Customer)||Rs. 20,000||23-58 years||11.99% to 20.00%||Rs. 50,000 to Rs. 15,00,000|
|State Bank of India||Rs. 24,000 (In metro and urban cities)||21-58 years||13.35%||12 times net monthly income|
|Dena Bank||Rs. 15,000||24-55 years||13.00% to 14.30%||Rs. 1,00,000|
|Punjab National Bank||Rs. 15,000||21-58 years||13.00% to 16.00%||Rs. 4,00,000|
|Axis Bank||Rs. 15,000||21-60 years||15.50% to 24%||Rs. 15,00,000|
|Yes Bank||Rs. 25,000||25-58 years||10.50%||Rs. 2,00,000 to Rs. 20,00,000|
|Allahabad Bank||Rs. 20,000||21-58 years||13.00%||Rs. 7,50,000|
|Standard Chartered||Rs. 22,000||NA||12.99%||Rs. 1,00,000 to Rs. 30,00,000|
|Kotak Mahindra Bank||Rs. 40,000||21-55 years||13% - 18%||Rs. 15,00,000|
|Bank of Maharashtra||Rs. 25,000||21-60 years||15.50% floating||Rs. 15,00,000|
|Indusind Bank||Rs. 25,000||21-65 years||12.99% to 18.25%||Rs. 15,00.000|
|Ratnakar Bank||Rs. 30,000||27-60 years||14.50% to 18.00%||Rs. 15,00,000|
|Central Bank||40% of Gross Salary||21-58 years||13.45%||Rs. 5,00,000|
|Bank of india||40% of Gross Income||21-58 years||12.95% to 14.95%||Rs. 2,00,000|
|HSBC Bank||Rs. 4,00,000 per annum||21-58 years||12.00% to 17.50%||Rs. 15,00,000|
|IDBI Bank||Rs. 20,000||22-60 years||13.00% to 14.00%||Rs. 10,00,000|
|Indian Oversees Bank||50% of Gross Salary||21-58 years||15.05%||Rs. 15,00,000|
|Citi Bank||Rs. 20,000||21-58 years||14.50% to 16.50%||Rs. 30,00,000|
|Karur Vysya Bank||25% of Gross Salary||21-58 years||14.25% to 16.75%||Rs. 10,00,000|
|Deutsche Bank||Rs. 25,000||25-60 years||Upto 24%||Rs. 15,00,000
Based on the above table for individuals earning:
- Rs. 10,000: Personal loan are granted by various co-operative banks, City Union Bank, State Bank of India, Abhyudaya Co-Operative Bank, The Greater Bombay Co-Operative Bank Ltd, Canara Bank
- Rs. 15,000 per month: Personal loan is provided by HDFC Bank, Dena Bank, Punjab National Bank, Axis Bank, ICICI Bank
Note: Financial institutions keep on revising interest rate. For latest rate and loan amount, please contact banks where you are applying for the loan. Also remember to repay monthly EMI on time. Frequent delayed repayments will affect your CIBIL score, which will give tough time in getting any type of credit in the future.
Not many people in India are aware of getting personal loan from peer to peer lending companies (also called PTPL or P2PL). These lenders offer loans at low interest rate and approvals are speedy. And these are best recommended for individuals with low income or poor CIBIL score/no credit or those who are in need of small credit. Check out comparison of banks and P2PL.
Features of Personal Loan
- The amount of credit offered is low since the minimum net income required is low. Quantum of loan is directly proportional to the income. i.e. higher the income, higher would be the credit offered.
- Repayment tenure ranges from 1 year to 5 year.
- Interest rate in case of unsecured loan is high ranging from 14% – 24%.
- Processing fee charged in addition to the interest rate.
- There is a prepayment penalty charged but not by every lender. Payment made before the actual tenure is actually loss making for the lender. This is the reason lenders charge extra money, if someone wants to end the loan before the standard tenure.
- Depending on the city where borrower resides, the credit amount and monthly income required varies.
- If the borrower stays in metro city like Mumbai, Pune, Chennai, Hyderabad, Bengaluru and others, the income requirement is high whereas someone staying in semi-urban city such as Nashik, Ahmedabad and others will be required less salary.
For verification purpose, most of the banks will ask for following documents from salaried employee:
- Application form and passport size photograph
- ID Proof: Passport / Driving License / Voters ID / PAN Card
- Address Proof: Leave and License Agreement/ Utility Bill / Passport
- Last 3/6 months bank statement
- Salary slip for last 3/6 months
- Income tax return for the last 3 years, business continuity proof and additional documents are requested from self employed individuals.
Low income individuals can also get personal loan against fixed deposit, credit card and LIC policy.
While choosing any type of loan, always select the one available at low interest rate. Read more on when to apply for personal loan. If you are interested in earning more money then check out simple ways to do it.
What are the risks to the banks when lending money to poor salaried?
There are two types of loans in India – secured and unsecured. Personal loan can fall under both these categories. Assuming individuals with low salary has no collateral or guarantor to keep in the custody of the lender, the risk associated is high. This is because, in case of default, banks will end up losing money. Although they have full rights to recover money.