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| Customer’s choice |
Calcutta, Nov. 20: The State Bank of India will simplify its personal loan scheme to circumvent competition from private finance companies such as GE Capital and Citi Financial.
The bank will ease the existing criteria for taking a personal loan under SBI Saral ? a new scheme that the country’s largest public sector bank is planning to launch.
Earlier, customers availing of a personal loan were required to keep a collateral with the bank in the form of a security such as National Savings Certificates, Kishan Vikas Patras or Life Insurance policies having a value equivalent to the loan amount.
This requirement is, however, done away with in the new scheme ? personal loan seekers won’t have to deposit any sort of security with the bank.
“Such security deposits have been posing a roadblock to personal loan offtake. The loan segment would have grown further had the restriction been removed. The management had been discussing this and it was decided that the barrier should be removed,” SBI officials told The Telegraph.
“The finance companies do not ask for any collateral and hence customers find it easier to deal with them,” they added.
SBI will now leaf through the borrower’s passbook to ascertain his or her creditworthiness. The bank will also verify the customer’s credit card statement for the last six months, if needed.
It has also relaxed another important norm under which personal loan customers were required to repay in post-dated cheques with SBI as the drawee bank.
The bank, as of date, does not accept post-dated cheques of any other banks. This means that the borrowers must either have a deposit account with SBI or will have to open one in order to take a personal loan. This clause has been removed under the new scheme.
SBI officials said the Saral scheme would allow customers to repay the loan in post-dated cheques of other banks as well. This relaxation alone is expected to increase the personal loan portfolio. “Our interest rate is 12.75 per cent, which is lower than that of the NBFCs. They offer rates as high as 17-18 per cent,” the officials added.
Like other banks, SBI determines the personal loan limit going by the income of the borrower and his or her repayment capacity. Normally one can get a loan of up to Rs 2.5 lakh.
