Loans for Retired Government Employees

Banks approve pension loans to the pensioners maintaining their pension or pension payment order with them. The loan eligibility of a pension loan applicant is derived from the monthly pension drawn by the pension account holder through his pension account. Banks usually do not ask for margin or security for pension loans. The interest rates of pension loans charged by the banks are also usually lower than their personal loan interest rates. 

Pensioners have very few chances of availing pension loan or personal loan from banks through which they do not draw their pension. Hence, they usually have very restricted consumer choice for availing credit in their golden years. If a pensioner fails to avail personal loan from his pension-drawing bank, then the best way to avail credit would be to request an earning family member to avail personal loan and use his pension to pay off the EMIs
Comparison Table of Personal Loan Interest Rates Offered to Pensioners

1. Banks/NBFCs
2. HDFC Bank
3. SBI
4. ICICI Bank
5. Axis Bank
6. Kotak Mahindra Bank
7. IndusInd Bank
8. IDFC First Bank
9. Bajaj Finserv
10. Tata Capital

availing top up home loan from their existing home loan lenders. As the interest rates of top-up home loans are usually the same as the underlying home loan, the interest rates of such top-up home loans are most likely to be lower than the pension loan rates. Thus, a top-up home loan can expand a pensioner’s consumer choice, especially if the home loan was availed from a lender other than the pension-drawing bank. In case, their home loan lender refuses them to offer them top-up home loans or charges higher interest rate for it, then they consider shifting their existing home loan to a lender willing to sanction them top-up home loan along with the loan transfer.

Pensioners having existing home loans can check the home loan rates offered by various banks and Housing Finance Companies to transfer their existing home loan at lower rates as well as avail top-up home loans as an additional source of finance for meeting personal needs.

Leading Banks/NBFCs offering Personal Loan for Pensioners

1) State Bank of India (SBI)
Purpose: To meet urgent cash requirements for purposes like the wedding of a child, paying medical bills, vacations, home renovation and much more.

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

2) Central Bank of India
Cent Pensioners
Purpose: For personal requirements, excluding any speculative activity or investment in real estate.
Eligibility: Pensioners/Family Pensioners drawing pension through Central Bank of India, including ex-staff

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

3) Punjab National Bank (PNB)
Personal Loan Scheme for Pensioners
Purpose: To meet personal requirements, including medical expenses and to offer funding assistance to public drawing pension via PNB

Eligibility: All the types of pensioners drawing pension through PNB branches
Interest Rate: 9.25% p.a. onwards
Minimum Loan Amount: Rs. 25,000
Maximum Loan Amount:

Age up to 70 years: Rs. 10 lakh or 18 times of Net Monthly Pension (For Defence pensioners, 20 times net monthly pension), whichever is lower
Age above 70 years and up to 75 years: Rs 7.50 lakh or 18 times their Net Monthly Pension (20 times in case of Defence Pensioners), whichever is lower
Age above 75 years: Rs. 5 lakh or 12 months of pension amount, whichever is lower
Processing Fee: Nil

Documentation Charges: Rs. 500 + GST
Security: Guarantee required of spouse/earning children/third party (Any one)
Repayment: Maximum 60 EMIs & In case of pensioners above 75 years: Maximum 24 EMIs

4) Tata Capital
Purpose: Pay medical bills, debt consolidation, wedding of child, vacation, home renovation, etc.

Eligibility: The minimum pension amount should be Rs. 15,000 or above to avail personal loan from Tata Capital
Collateral-free loan
Interest Rate: 10.99% p.a. onwards
Processing Fee: 2.75% of the sanctioned loan amount
Repayment Tenure: Up to 6 years
Pre-payment Charges: Nil (After 6 months EMIs are paid)
No extensive paperwork
Documents Required: Identity, Address and Income Proofs

5) Bank of India
BOI Star Pensioner Loan Scheme
Purpose: For various personal uses like paying medical bills, home renovation, debt consolidation, etc. Not for any speculative purpose.

Eligibility: Regular pensioners or family pensioners drawing regular monthly pension via BOI & Retired employees (other than dismissed/compulsorily retired) are eligible

Interest Rate: 9.35% p.a.
Nature of Loan: Term Loan, Demand Loan, Overdraft (reducible as per repayment schedule)
Loan Amount: Unsecured – 15 months of Net Pension (Gross Income Less Income Tax and EMI of other loans, if any) & Secured is 20 months of net pension
Processing Fee: 2.00% of the loan amount, Min. Rs. 500 & Max. Rs. 2,000 (No Processing Charges for senior citizens (60 years & above)

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