The global COVID-19 spread which previously led to the shutdown of all operations and businesses has impacted our economy drastically. The daily wage workers and the middle class are the worst-hit sections of the society as many have lost their jobs whereas many are going through pay cuts. People have spent their year’s savings they have held on for survival during the last few months.
Considering all the hardships of the people, RBI and government have taken various measures like the cut on the repo rate, offering moratorium for the retail, and providing specific COVID-19 personal loans. All these measures have been taken to help people who are suffering financially due to the coronavirus pandemic. These steps will not only reduce their financial burden but provide them with money to survive the financial crunches. The COVID-19 personal loan scheme ensures liquidity of funds in the hands of the common man.
Banks Providing COVID-19 Loans
- Punjab National Bank (PNB)
- Indian Overseas Bank (IOB)
- Bank of Baroda
- Bank of Maharashtra
- Union Bank of India
- UCO Bank
- Indian Bank
- State Bank of India
- Bank of India
Covid-19 personal loans can prove to be a relief for those who are going to financial crunches. The loan offers the biggest relaxation on the interest rate as the interest rate at which this loan is offered is quite low than the regular personal loans. It starts @ 7% and can go up to 10%, depending on the borrower’s credit score, income and repayment capacity.
Here are a few things which you need to know about the covid-19 specific personal loan.
Use: As the name suggests COVID-19 personal loans can be used for any personal reason, but it has a restriction to use for raising business capital.
Interest Rate: As discussed above, the interest rate for a covid-19 personal loan ranges between 7% p.a. and 10% p.a., which is much lower than a regular personal loan.
Offering Banks: COVID-19 personal loans are being offered by all the top banks. However, Bank of Baroda and a few others are offering this loan only to their existing customers. You can also avail this from SBI, Union Bank of India, Indian Overseas Bank, Indian Bank, UCO Bank, Bank of India, Bank of Maharashtra, and Punjab National Bank. All the other banks only provide loan moratorium for three months, from March to May 2020.
Eligibility: These loans are mostly offered to the existing customers such as those who have their salary account, existing home loan, personal loan, car loan, etc with the lenders. The loan is also offered based on previous repayment track record/ CIBIL score, debt to income ratio to ensure that they don’t default with EMIs.
For Salaried Individuals -10 times the latest monthly gross salary income to a maximum loan limit of ₹ 5 lakhs
For Non- Salaried Individuals -60 % of the last annual income based on ITR, to a maximum of ₹ 5 lakhs.
To avail, the loan one needs to submit – Income proof, latest salary slip, ITR documents, Address proof, Aadhar card.
Covid-19 personal loans are widely available at reasonable rates, but that does not mean that one should opt for it without any reason. One should opt for it only when he/she is going through a financially tough time where borrowing seems to be the only option left. One doesn’t know that when this pandemic will last and borrowing at this point of time sooner or later is going to add on to your financial burden. This is because the money you are borrowing right now needs to be repaid through EMIs which for sure will increase your monthly expenses later.