New Delhi: In May this year, several public sector banks announced the granting of personal loans of up to Rs 5 lakh to individuals to cover expenses related to the Covid-19 treatment of oneself and members of his family. It was part of the COVID relief measures announced by the Reserve Bank of India in early May following the second wave of the pandemic that swept the country, triggering untold misery for families of all income groups.
These loans are offered at concessional rates starting at 6.85% to salaried, non-salaried and retired individuals. The minimum loan amount that can be used under this facility is Rs 25,000 and the maximum loan amount can be up to Rs 5 lakh. The repayment term is 5 years and banks will not charge any processing fees on these loans. To qualify for these loans, borrowers must pledge that the funds are needed to cover COVID treatment expenses. Banks are also requesting a COVID-positive report from customers who take out loans for processing, as of April 1, 2021.
Here are the terms and conditions of COVID personal loans offered by PSU banks:
State Bank of India (SBI)
SBI is offering a KAVACH personal loan to cover expenses related to COVID-19 treatment from April 1, 2021. This loan is offered to existing employee and non-employee clients of the bank. Retirees drawing a pension from the bank can also benefit from this loan. There are no foreclosure fees in this loan and these loans can be repaid within five years. The minimum loan amount is Rs 25,000 and the maximum amount is Rs 5 lakh. SBI said it will charge 8.5% interest on these loans.
National Bank of Punjab (PNB)
PNB markets its personal COVID loans under the name PNB Sahyog RIN COVID. This loan is offered specifically for the treatment of oneself or of family members affected by COVID as of April 1, 2021. However, PNB offers this loan to all government or private employees who have their salary account with the bank and drawing regular income for the past 12 months. The maximum loan amount can be six times the average salary of the last six months credited to the account subject to an upper limit of Rs 3 lakh. The interest rate on this loan will be 8.5%.
Bank of India (BOI)
BOI also offers its COVID-19 personal loan only to clients receiving a salary through the bank and to all existing clients of personal loans and home loans. The maximum loan amount is capped at Rs 5 lakh and the maximum duration of the program is three years including a six month moratorium. During the moratorium period, borrowers are not required to make any down payments to the bank, but interest will continue to accrue. The interest rate on this loan is tied to the monthly recast pension rate. At present, the bank is taking 6.85% interest on this loan.
Bank of Baroda’s existing personal loan, home loan, loan-for-home (LAP) and auto loan borrowers can benefit from its COVID personal loans. Second, the customer must have stayed with the bank for at least six months and have already paid a minimum of three months on account. Customers can benefit from 10% of the sanctioned limit of an existing and ongoing home loan or LAP and 20% of the sanctioned limit of the car loan as a COVID personal loan subject to the maximum limit of Rs 5 lakh. The interest rate that will be charged is BRLLR (Baroda Repo Linked Lending Rate) + SP + 2.75% per annum with monthly rest.